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Welcome to rationally BASED, a podcast about law and politics, on the edge. Law professor Ilan Wurman, with co-host Kathryn Johnson, cover cutting-edge, and edgy, legal and political news, ideas, and developments.
rationally BASED
Episode 27 | Supreme Court Delivers a Landmark Win for the Unitary Executive
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In this episode, Kathryn Johnson and law professors Ilan Wurman and Joshua Kleinfeld break down two blockbuster end-of-term SCOTUS decisions on the administrative state: Trump v. Slaughter and Trump v. Cook.
In the first case, the Supreme Court held that the President can remove commissioners and directors from powerful, insulated agencies like the FTC, the SEC, and the CFPB — effectively overruling a century of government by independent agencies. This is one of the most significant expansions of presidential authority over the executive branch in decades. The era of unelected bureaucrats running the federal government may not be over, but this is among the biggest blows it has ever been dealt.
In the second case, however, the Supreme Court carved out an exception for the Federal Reserve. Does the exception make constitutional sense, or is it simply a pragmatic concession?
These are earth-shattering developments. Was the Court right to allow the President to fire all principal officers? Should expert power (agencies) be more insulated against popular power (presidents)? Is the exception for the Fed just based on pragmatism? Is that a bad thing?
This is the rational — and based — discussion of the Court’s biggest decisions that you won’t hear anywhere else.
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Welcome back to Rationally Based, a podcast about law and politics on the edge. I'm your host, Elon Werman, a law professor at the University of Minnesota Law School.
SPEAKER_00I'm Catherine Johnson with Center of the American Experiment.
SPEAKER_02And I'm Josh Kleinfeld, Rouse Professor of Law at Euscalia Law School. Catherine, what's on deck today?
SPEAKER_00Well, this is our third of our end-of-term Supreme Court episodes. Our focus today will be on the pair of decisions on the administrative state and independent agencies. First, the court ruled that Trump could fire a commissioner of the FTC. This is a massive development. But second, the court held that somehow the Federal Reserve is special. Does that make any sense? We'll break it down.
SPEAKER_01Let's dive in. All right, Catherine, Josh, where should we start? Initial reactions, earth-shattering kabooms. How big are these cases?
SPEAKER_02I mean, these are world-changing cases. Administrative state and independent agencies might sound technical and in the weeds, but folks, make no mistake, America is different today than it was yesterday. These cases are really big. Elon and I will be teaching them to the end of our careers, and they will be read and taught to law students in a hundred years.
SPEAKER_01I'm not sure. I'm not sure I'll be uh teaching the Cook case, by the way, because there's not much law in there as far as I can see. But okay, no, no, that's jumping at the gun. Catherine, what's the man on the street saying about these cases?
SPEAKER_00Well, it seems to me that this is a huge win for democracy and the constitution are really foundational things to uh America. I mean, these unelected bureaucrats were basically running a fourth branch of government that is nowhere to be found in the Constitution, right? And so now some of that power has shifted back into the hands of ultimately the people who get to elect our president. So for me, it feels like a huge win on that front. Even though, like you say, Josh, I think it doesn't sound very exciting at the outset.
SPEAKER_01All right, let's not get too far ahead of it. Uh, Catherine, our listeners may not even know what all these decisions are. Can you set them up for us?
SPEAKER_00Absolutely. So the first one we're gonna talk about is Trump versus Slaughter. Rebecca Slaughter was a commissioner of the Federal Trade Commission, an independent agency of the government. Independent because it has removal protections, meaning one can only be fired for cause. Um, they list things like inefficiency, neglect of duty, or malfeasance in office. Trump removed her basically without citing cause. Um, the Supreme Court now has upheld that firing. The other case is Trump versus Cook, which to me they looked very similar, but got very different outcomes. So Trump fired Lisa Cook from the Federal Reserve Board of Governors, also an independent government agency, as his cause for firing her. Trump cited allegations that she had made false statements on a mortgage application. And this time the court held that Trump could not remove Cook from that role. So, what we'll have to get into is yeah, how did these situations end up so different? I also found it interesting that both of these majority opinions were authored by Chief Justice Roberts. So I saw he got some criticism and in the way he did this. I'd love to know what you guys think. But Josh, what do you think?
SPEAKER_02Well, I think it's it's critical that these two cases were decided together, one on the FTC and one on the Fed. For those of us who have been in this area for a long time, the question mark was always the Fed. So, you know, nine months ago, I'm in a text group with some of my law school friends. And nine months ago, when the court granted cert in the uh Trump v. Slaughter case, the FTC case, I texted my friends and I said, here's my prediction. Um, the court's gonna strike down independent agencies and make an exception for the Fed, however forced it will make an exception. And uh, you know, victory lap for me, I guess, but the more important point is that this was predictable. It was predictable if you understand the background. So I why don't I start off here by just giving some background and then we can get into the discussion. Uh so the Constitution lays out three branches, right? Based on function, legislative, executive, and judicial. Um there's no mention of agencies, the whole alphabet soup of like the FDA and the DEA and the EPC and the FTC, it's not in the Constitution. But of course, it's part of the world we live in. You drive around DC, and that's what you see is the big buildings of the FTC or Department of Commerce or whatever, all these departments. Um what's the story here? And the story is basically that the Constitution was written in the 18th century, and a new idea of government gets going in the 19th century. Uh when it was when the Constitution was written, it was organized by function. There's the function of legislating, there's the function of executing the laws, there's the function of adjudicating cases. That's how they thought about government. The new mode of government was organized by subject, right? There's like a ministry, it's like the European ministries, right? The Ministry of Finance, the Ministry of Education, the Ministry of Agriculture. We just call them departments, Department of Agriculture, Department of Transportation. Um, and there was an explosion of all these agencies in uh in the early 20th century. We're talking Woodrow Wilson, uh Franklin D. Roosevelt, and it's kept going ever since. So it's like I think of it like a graph. Like we have two layers of government. We have the original constitutional structure and then layered atop it, this sort of 19th-century um ministries uh uh structure. And the way we got all those agencies, every one of them is sort of based on the same thing. Uh, Congress passes a statute and it says, there shall be a department of whatever and its powers shall be XYZ. There shall be a department of education and its powers shall be XYZ. Those are called organic statutes. They create agencies and they delegate them powers and duties. But how do you keep them within the Constitution? How do you manage the like amalgamation of these two different pieces of government or styles of government? And part of the answer was, well, Congress made them and Congress can change them at will, right? It can always undo the statute. And part of the answer was judges can review what these agencies do and say, you're not acting consistently with your statute or you're not acting consistently with the Constitution. And part of the answer was the president can pick the person in charge of the agencies, typically with Senate approval, just like the selection process for judges. But the great unanswered question was always: can the president also remove these executive branch officials? Can he fire them? To be in charge of the executive branch, removal is the critical thing. If the president has removal authority, the heads of the agencies truly work for him. They either do what he tells them to do or he can fire them and replace them with someone who will. If they are immune from removal, well, they're like judges. They're selected by the president, but then they're, you know, not subject to removal. That's why the judges are a third branch of the government. So is the administrative state, are these agencies a fourth branch of government? Uh when Congress wrote the statutes, it made some agency heads independent and others removable. And Congress just did it on a case-by-case basis. It made a policy decision. Uh, here we want a lot of independence, we'll make this agency head removable and this one not removable. So uh it usually does it by putting in a phrase. It says the commissioner or department head or whoever can only be removed for efficiency, neglect of duty, or malfeasance in office. And that means they are not removable. But the constitution says the executive power shall be vested in a president of the United States of America who's supposed to be in charge of the executive branch. So is it constitutional for parts of the executive to be immune from the president? So, okay, almost done with background, but this is important. Hundred years ago, in an epic case, Humphreys Executor, 1935, which was in fact about the FTC, just like slaughter today, um uh the Supreme Court approved independent agencies with heads that can't be removed. And the and the grounds in that case, that Humphreys executor case, were really narrow, but they've had, it's like, it's like Jesus saying to Peter, on this rock, I will build my church. It starts small, it gets really big. Uh and so now you have, you know, on the basis of Humphrey's executor, you have a whole ton of agencies managing huge swathes of the economy and other parts of American life, like the National Labor Relations Board or the uh Consumer Financial Protection Bureau or the Securities and Exchange Commission. Uh, there are dozens of them. So the big picture is they all represent a massive slice of governance power taken out of the democracy's hands, and a whole lot of government not subject to the president, who's the one guy elected. Theoretically, Congress could always double back and change the statute, but that's not day-to-day control. And in fact, with the creation of all these agencies, Congress went passive. It handed off the work of governing through delegation. So this is also the story of how Congress fell. And conservatives have been uh railing against this for decades. We call it undemocratic, government by elect unelected bureaucrats, and for decades, the project of the conservative legal movement has been to end independent agencies. And it centers on the claim that constitutionally the president must have removal power over any agency, even if statutes say otherwise. That's what the term unitary executive means. The left makes it sound sinister. I think it was kind of an ill-chosen term. It does sound a little bit sinister, but it shouldn't. It just means that the person who is elected, the president, has removal power and therefore ultimate supervision of the agencies. And everyone in the legal conservative movement who is interested in this issue, like basically agreed about all that, except for the Fed. Even for many dedicated conservatives, the stumbling block was always the Fed. Because chief executives have an enduring interest in lowering interest rates before elections. It juices the economy, it makes the economy goes hot, as the saying goes, and uh there's lots of employment, there's lots of wealth. It's temporary, it's inflationary, but it helps the chief executive get elected again. And so you see this in like Latin American democracies, where the chief executive juices the economy before every election, and then there's an inflationary spiral afterwards. So I've been part of a million conferences and meetings with other conservative lawyers about independent agencies, and everyone always agrees until someone says, what about the Fed? And then there's differences of opinion or discomfort or silence. So the Supreme Court in our era, the Roberts Court, really cares about reigning in administrative power and restoring the constitutional order. That might be the defining theme of the Roberts Court. I think Chief Justice Roberts sees it as part of his legacy, and that's why he chose to write the opinions here. He assigned them to himself, because this is part of his gift to the country. Um, logically, the outcome just has to be a principle with an exception if you think independent agencies are wrong, but we need the Fed. And that's why nine months ago I predicted that to my friends, and it came true. So that's a lot of background, but hopefully it sets us up for discussion.
SPEAKER_00Do you guys find it interesting at all that this is a topic that has been talked about among um kind of the elite conservative thought leaders for a long time? And it was President Trump who had the balls and the foresight to just go ahead and fire someone and set this whole thing in motion. And yet there's still a lot of people from that first group who are so anti-Trump. And I think this is another thing that is a huge win for him that represents something conservatives have wanted for so long. Well, Elon, this is a major area of expertise for you. You wrote a brief in the slaughter case, have a case book that covers this, and you cover it again in your new book, which everyone should purchase from Amazon. What is your view?
SPEAKER_01My new book, by the way, The Constitution of 1789, a new introduction. Catherine, I'm embarrassed I have to do that myself. Uh, but it's over uh my shoulder. Uh thank you for the shout-out. Yeah.
SPEAKER_00So I couldn't see mine because my laptop is stacked on top of it to give me a nice lift. I'm sorry.
SPEAKER_01That's totally fine. I want everyone to buy the book. You don't have to read it, but you can do it for all you can use it for all sorts of things, uh, like putting your laptop up. Okay. So uh I have a few points, just initial reactions, which you know, one thing we'll uh Josh, I'm sure we'll get to this later, but like it didn't Fed independence didn't stop quantitative easing before the 2024 election. Um uh it didn't stop the Great Depression uh uh from being exacerbated, uh, didn't stop Joe Biden from releasing a bunch of oil from the strategic oil reserve. So, like, I like anyway, that's a broader topic. Is Fed independence really even a thing? Are they truly independent, independent of what? So, so but let's bracket that for now because I want to talk about sort of the original understanding of the constitution. This is also the argument that I make in my book and um the brief. The first thing I will slightly disagree with Josh in so far as like the constitution clearly does contemplate agencies, it clearly contemplates departments, it does not contemplate independent agencies, independent departments, which I think is what uh Josh uh was saying. So, you know, there's uh an opinions clause um that says that the president may demand the opinions in writing from the principal officers of each of the executive departments, right? So it contemplates uh departments. Uh Congress uh can, under the necessary proper clause, and this is confirmed by the appointments clause, can establish offices by law, right? So everyone understood that the president would be unable to execute the law on his own and would need assistance. These assistants are officers, and sometimes those officers have an infrastructure under them, like a department. And from 1789, there was a department of treasury, there was a department of war, which we've come back to, uh, and there was a department of foreign affairs, which was renamed to be uh the State Department. So, what makes um the independent agencies different is as Joshua said, these four-cause removal protections. The idea is you cannot remove them unless they are inefficient, right? They neglected their duty or they're malfeasant. What does this mean? It means that if there's a mere policy disagreement with the president, well, that's not inefficiency. Inefficiency is like, you know, not showing up till 10, you know, or to the office. So I guess that's the government. So let's say 11, you know, uh to account for government employee norms. That's inefficiency. Neglective duty is well, neglect of the statute, as long as the statute gives discretion, uh, you you know, allows policy A, B, or C. If you prefer policy A and the president prefers policy B, that's too bad. You you you haven't neglected your duty, right? Your duty is to the statute, right? To execute the statute. Now, feasance is like embezzlement, mortgage fraud, maybe. We'll we'll get to that uh with the Trumpy Cook case. So what makes them independent, of course, is uh that you can't fire them for policy uh disagreement. Now, one other sort of point of background, and then I'll give sort of uh uh what I think the historical answer is uh uh as succinctly as possible. Both Catherine and Joshua mention this, but it's really this modern Headless Fourth branch, it's a dual problem, right? It's problem number one is this delegation of legislative authority to the agencies. The Congress says things like, oh, we want clean air, EPA, you figure out how to do it, you figure out who stops polluting, right? Or we don't like unfair and deceptive trade practices, or we don't like this or that, you know. Um, and then they assign it uh to a commission whose commissioners can't be removed uh by the president. And so you delegate legislative-like power, regulatory power to govern American life to people who are not ultimately elected and cannot be removed by the president. They are, however, appointed every so often, right, by presidents uh and so on. Okay, so what's the answer? Um, and then uh I'll stop because I know we've been going on uh for a long time. The constitution, I've been going on for a long time. The constitution doesn't say removal anywhere, right? So the debate has always been like, can Congress condition the president's removal power under the necessary and proper clause, right? Congress has the power uh to establish offices, and in establishing offices, it can establish duties, it can establish tenure, like is it gonna be a four-year term? Can't why can't it also establish removal restrictions, right? For cause. The alternative argument is, as Josh said, well, the president has the executive power. What does that entail? Does it entail removal implicitly? Uh the president has the duty to take care that the laws be faithfully executed. And a lot of people say that um, well, look, the removal power isn't there. Um, my dear friend and mentor, Michael McConnell, professor at Stanford Law School, says it's inexplicable that the framers didn't uh mention the removal power. But as I explain in my book, it is explicable why. Because there was a maximum of the common law that the power to remove was an incident to the power to appoint, which makes sense, right? So if the executive power can't be done by one person, it's the power to oversee the execution of the laws. You need help, you need assistance. So you appoint people to help. Well, you can remove them by making a new appointment. Just appoint someone new and displace the prior officer. So the power to remove is an incident to the power to appoint. Thomas Jefferson made this point, which the Chief Justice quotes in the slaughter uh case. So why doesn't the constitution mention removal? This is like good dynamite stuff you're all getting right now, by the way, to our listeners. Because until the Committee on Postpone Matters in the Constitutional Convention, which issued its report in September of 1787, the Burley Committee, okay, the drafts of the Constitution provided that the Senate would have appointment of some officers and the president would have appointment of other officers. There was no need to mention removal because removal was incident to appointment. The Senate would remove ambassadors by appointing new ones. Okay. For example, it wasn't until the Committee on Prosponed Matters, two weeks before the draft constitution was signed, the final constitution was signed, that the convention assigned the removal, uh the appointment, excuse me, of officers to the president and senate together, to the president binding with advice and consent. They didn't have time to think about what are the implications. And so they debated this in 1789. Well, if removal is incident to appointment, does the president and senate together remove? Or um uh does the president somehow have the removal power independently of this sort of Senate check on the appointment? They debated it in 1789, and both arguments are plausible. Okay, both arguments are plausible, but ultimately Madison and Fisher Ames carried the day. They made two principal arguments. The first argument was the executive power is the power to execute the law, which includes the power to appoint officers and to remove them. The Constitution gives the Senate a check on the appointment, but not on the removal. Okay, which is kind of interesting because it somewhat derogates from that maxim of removal is incident to appointment. But the other argument he made is that the take care clause necessitates derogating from the common law rule. He says, he said in the debates, if the Constitution said nothing else about it, I would agree that removal is incident to appointment, the Senate must have a share in the removal authority. But it says the president has to take care that the laws are faithfully executed. If the Senate has a back-end check on the removal power, that's effectively a legislative-like veto. The Senate can decide for itself whether the laws are being faithfully executed, and that would derogate from the president's duty and responsibility. And so I think that is sort of the clean-cut case for the original uh understanding. And I would say the court more or less followed uh that line of thinking, though it did not delve into like appointments clause versus executive power clause versus take care clause or anything like that. It relied a lot on its recent precedent. So let me stop there. A lot more we could say, like I don't think it undermines the civil service. I think you can still create pockets of independence, but I don't know, reactions? Does this seem impeccably reasoned and obviously right?
SPEAKER_02Well, I would love to get both of your reactions to what seems to me like the best argument on the other side. So this argument is articulated in Sotomayor's dissent in the case, which she wrote for basically the three liberal uh judges, uh Jackson, Sotomayor, and Kagan. Kagan has also articulated this in a number of other cases. And for me, I don't know how you you react to this, Elon. I'm not sure how you will, Catherine, but for me, this is a really strong kind of keep you up at night sort of sort of argument. I ultimately disagree with it, but I think it's hard. Um and you know, rationally based tries to give the argument on both sides. So here it goes. Um so here's here's how I think sort of my yours argument goes. Independent agencies are subject to democratic control. Congress made them. Congress is our most democratic branch, and Congress made them and can change them at any time. So what we're seeing with the independent agencies is an ongoing congressional choice. And what we're really limiting is uh in a case like this one, is Congress's ability to structure the execution of its own laws. Why can't Congress say, we want someone to manage the environment or healthy medicines or the money supply, or maybe in the future, AI, right? Maybe there'll be a department of AI management. And so, you know, there shall be an EPA, there shall be a department of AI management. Here it's governing standards. We think the head of the agency ought to be subject to the president in this case, but in this case, we think the agency head ought to be have have a seven year term, but not be subject to removal by the President. And that's our decision as Congress, and we're democratic too. So in fact, their view is it's more democratic to let Congress have its choice than to overrule it by a judicial theory of the Constitution. And they would say it's not really a headless fourth branch. It's subject to judicial oversight. The president has the appointment power, and Congress has standing oversight and ability to revise. From a constitutional text standpoint, the Constitution is quite explicit about appointment, but it's silent on removal, and this and the silence is noticeable. I mean, there's been disagreement about this since the founding. That's why it was like the great settlement of 1789, because they disagreed back in 1789 about the implications of the Constitution's silence. And finally, maybe this kind of structure is necessary. Maybe Congress was wise about it because there's some areas of life we just want to insulate from partisan politics, like product safety. We don't want businesses to lobby to get an exception for their products being unsafe. The money supply. So the result of changing this as the dissent sees it is not just to disempower bureaucracies, but to further empower the president and disempower Congress. So governmental activity under these agencies doesn't just cease. It comes under Trump's control, or if not Trump, Biden's control or Obama's control. I mean, no party has a stronghold on the presidency. And so here's Sotomayor's last paragraph. Quote: Today the court discards that democratic regime in favor of one that distorts the structure of government to fit the majority's theory of unitary total executive control, right? Discards a democratic regime in favor of a constitutional theory. So as I said, I think this is a keep you up at night kind of argument. Uh I ultimately disagree with it, but let me throw it open to you. What do you think?
SPEAKER_01Catherine will sleep just fine, I have a feeling.
SPEAKER_00Well, I think the thing obviously I got caught up on is the idea that they are independent or insulated from partisan politics in some way. I mean, come on, give me a break. That is not true whatsoever. They are completely owned by partisan politics right now. So that when there is an executive who is a Democrat that is in office, he can get, or she, excuse me, can get so much more done than a Republican, because all of the agencies are essentially on his side. And so how does that make any sense that one executive can have much more power than another? And I don't know. I guess maybe this isn't a good argument, but Congress clearly has too much on their hands. They don't need anything else. They can't get anything done. Like they go to recess for most of the year and they don't want to do anything. Look at them right now. So they don't need more power.
SPEAKER_01So as always, I feel like Catherine cuts to the nub in 90 seconds. So we could just end the episode here. Like, what you know, what is it that you said a few episodes ago, Catherine, that like you lawyers have a like really roundabout ways to get to like the obvious answers to things. I love that point that I will that's a keep you up at night kind of point by the beginning. But uh okay, so let me react as well and then throw it back to you, Josh. Um so on its own terms, I don't think it's democratic, except in the silly sense that Congress passed a law. But sometimes Congress has incentives to act, act, act anti-democratically, right? So this is classic public choice theory, John Hart Ely, you know, from the uh 1970s and 1980s. Why do we see all these broad delegations of power? As my administrative law students know, legislation regulation students know. It's because it's beneficial to members of Congress because they can say, hey, I voted for clean air. Who could be against that? You can go back to your constituencies and you can say, look, I voted for clean air. But who's gonna make the tough choices to say, like, oh, West Virginia has to shut down its coal plants? Oh, I didn't mean that. The EPA decided that. The executive branch, independent agencies, well, the APA is not independent, but in that case, the executive branch decided it or the independent agency decided it. So on the back end, I can lobby for my constituents, on behalf of my constituents, I can lobby the agency. So it's a win on the front end and a win on the back end. This isn't democratic. It's it's in their incentive, it's in their interest, you know, not to stand up and be counted, I think is what somebody said. But instead to just vote for these broad good things. So I just I don't think it's actually democratic, except in the you know, silly sense that like, is it democratic if Congress passed a law adjourning Cina die and said, uh, we impose a monarchy? You know, like I don't know. Okay, obviously that's a bit of an extreme example, but simply because Congress has voted on something, does that make the thing democratic? Okay, that's the first point.
SPEAKER_00The second point is it's like democratic socialism. Is it really democratic? Exactly.
SPEAKER_02And it's not really a silly example, Elan. I mean, it's an extreme example, but what your fundamental point, which I think is really compelling, is that um Congress might vote in structures that reduce popular majoritarian control in the long run. And that's what they've done here.
SPEAKER_01That's right. So the the other point I'll make is in response, uh, Josh, to your necessary and proper clause argument. Um, the reason I think that doesn't work is because, again, what it begs the question of, well, what is the executive power? And if the executive power was thought to include removal, if the take care clause is thought to require uh removal, then it doesn't get you there. Now, of course, if all that's wrong, then sure, I don't know why Congress couldn't maybe regulate it under the necessary and proper clause. But if you think that the president, by virtue of the executive power, has to have supervision and therefore has to have at a minimum the removal power, once you recognize that, it doesn't make sense to say um that Congress can condition or restrict the president's ability to exercise the removal power to only cause, for example. Because think about it in the pardon concept. So put it another way, Josh. The argument is often Congress's greater power to establish offices, as you suggested. It can create the office, it can abolish it tomorrow, includes the lesser power to condition the president's ability to remove the officer. But nobody would say that Congress's greater power to establish federal crimes includes the lesser power of dictating when the president can pardon people for having committed those crimes. Nobody would say that. No one would say the president could only pardon someone who's convicted of this particular crime that we're creating for cause, for these causes. Everyone would agree that that derogates from the president's power. Let me say um one other thing because again, I uh the only other point I was gonna make is Catherine's point. If she beat me to it, it's just like independent, like give me a break. Like well, actually, like let me focus on that one second. Independent of what? Independent of the president, sure. Independent of politics? No, they're all partisan hacks. Okay, well, maybe that's a little extreme, but you get it. Obviously, they have political opinions. Who gets appointed to these positions? Someone who's never had a political bone in their body? Go back to like the extreme example, independent prosecutors, independent councils, okay? Go back to the Iran Contra. I feel like we talked about this in a very early episode, Catherine. I can't remember which one it was. Okay. Are the independent councils independent of politics? Really? If that's so, why did the water uh the Iran Contra independent council, okay, file an indictment against Cap Weinberger implicating George H.W. Bush the weekend before the 1992 presidential elections? Which indictment was later thrown out. Oh, are they independent of politics? Give me a break. It's just not true. Um, though you know what, let me stop there. Let me stop there.
SPEAKER_02Well, I'll just throw in my own argument. And and typically I totally agree with both of you, but I have this very philosophical, kind of abstract way of putting it. But here's how I think of it what the independent agencies do, and the whole vision on which it's based, which we'll get into more later in the episode, but this sort of Woodrow Wilson, Prussian bureaucracy kind of kind of vision, is there should be areas of life that are governed by experts. What we need is expert control. So if you're talking medicine, have doctors and scientists be in charge of it. That's expert control. If you're talking, I don't know, um uh the economy, have a bunch of economists exercise governmental control. If you're and you know, so always kind of tack to PhDs in a given field who have true expertise, get a bunch of them together and put them in charge of the subject matter. Whatever the subject matter, find the relevant PhD and put them in charge of it. And I just disagree with that vision of government. I think expert control equals elite control, it is an alternative to democracy. And uh um it takes, both as a matter of principle and consequence, it takes way too much power out of the public's hands, out of the hands of the people, the demos, the we the people that's supposed to collect control their own public life, and puts it in the hands of an expert class, which is A, an elitist class, and B always has a progressive tilt. It's had a progressive tilt for a hundred years. And what we see now with you know PhDs very strongly correlating with left-wing politics is the culmination of a hundred-year pattern. So, what you really get if you put this structure in place that, you know, Sotomayor and Kagan and Jackson are calling for is you have tons of pockets of American governmental life, of power, that are under the control of expert elites that are leftward, and then it just and it just doesn't matter who gets elected. You can elect as many Republican presidents and governors as you like. The real governance is done by the independent agencies with their left-wing standards. And so I think that's wrong, both as a matter of principle and consequence. As I said, the argument um kept me up for some nights, but I came down on the on the side of based, man. Base. Oh, good.
SPEAKER_01Good. We weren't sure after your previous episode. No, okay. Uh so um, Josh, but let we we have some other things we wanted to talk about, but let's just jump to this because I wanted to troll you a little bit here. What is the verdict of history, as you might say? What is the social start about all of this? Because um, which is a term Josh introduced us to, you know, a couple uh episodes ago. Because, you know, uh just like the welfare state that you love in in small doses, I admit. Um, I said I'm trolling him. Um, just like the welfare state you love, the bureaucracy, the administrative state came from the Prussians, it came from the Germans, right? So, like, were what what are you seeing that they didn't see to uh throw back the line you gave to me?
SPEAKER_02And then we'll go back to besides the JD, I have a PhD in philosophy. My PhD comes from a German university, and I studied Hegel and Max Weber. So Elon loves to tease me about my my Germanophile or whatever thing. But but okay, here's here's where this I think gets interesting and very relevant to this opinion. Um, you know, we we throw around around this term bureaucracy, right? And it has an origin, it has a conceptual origin. Bureaucracy comes from the word bureaus, which means like desk and kratos, meaning rule, just like democracy is demos plus kratos, the rule of the demos of the people. Bureaucracy is rule by people who sit at desks, rule by office holders. That's the etymological origin of the term. And it's not inevitable, it's not like every society always has had, you know, thousands of people working in bureaucracies. Um uh it comes so naturally, we think that there must everywhere be like a department of filled with experts in a particular um field, but that's not so. This was developed in Germany, this concept of a bureaucracy. And the and the idea was that it's not inefficient, it's highly efficient. You get a bunch of experts together, you put them in a hierarchical structure, they make decisions at the top based on neutral apolitical expertise in the field, like what is best for the economy, what is best for medicine. They make policies and they and it goes down through the levels to where it gets executed by the people at the bottom level. Uh, and it certainly bureaucracy can do things on a mass scale. The experiment in government by office holders, bureaucratos, bureaucracy, was embarked on in essentially in Germany. We now call it Germany. At the time, it was Prussia in the 1700s and especially the 1800s. It was a 19th-century development. Now, here's where it gets connected to America. Um, Germany was very prestigious in American academic circles in the late 19th and early 20th century. And that is the era from which Woodrow Wilson comes. He was a man of the late 19th century and early 20th century. And he was an academic. Um and he was totally taken by this theory of bureaucracy and expert control. And frankly, he loved neutral expertise, hated majoritarian democracy, and sort of hated the constitution. So I'm going to quote these are quotes that you see in Gorsuch's opinion. He said, quote, this is not Gorsuch, this is Wilson being quoted by Gorsuch. He said, the nation's traditional commitment to popular sovereignty entrusted too much to selfish, ignorant, timid, stubborn, or foolish people. And he was president? Come on. And then we need agencies, said Wilson, created and staffed by scientific and technical experts with the technical skill to translate far-reaching legislation into reality. That might be inconsistent with the Constitution, but the simple tripartite form of government given by our Constitution is inadequate to deal with modern problems. And those bureaucrats and those agencies should have whatever power might be required to achieve the desired results. And I think there are still many, many people who believe this. Woodrow Wilson puts it very strongly and very directly, but that belief in the expert power of agencies and the bad judgment, bad knowledge, bad character of the American people is still extremely widespread. You know, true democracy still has its enemies in our own country because a lot of people believe in expert control.
SPEAKER_01So let me, Josh, if you don't mind. So one point about that, and then um we probably have to move on to the Fed uh at some point here. Um and I know Catherine had a few last-minute follow-ups on this issue, but the point about Wilson saying the tripartite system separation of powers has failed, right? The early progenitors recognized that the administrative state was sort of inconsistent with the constitution. Today, all the academic scholars write stuff about how, oh no, the administrative state was with us all along. It's consistent with the constitution and so on. So it's an interesting sort of development there. Sorry. Uh any any final points on that, Josh? I didn't mean to interrupt.
SPEAKER_02Oh, I think it's just nice to fill in the background um of what all this is really about. Philosophically, what this case is really about is dealing a major blow to Wilson's vision of government by experts. Like that's the big picture here. This is about uh the elected person, the most directly elected person, the president, getting to exercise control over the unelected class of experts with their leftward tilt that would otherwise be running the government. So this case is awesome from my perspective, but I'm a populist.
SPEAKER_00Yeah, I love that explanation, Josh, because I think if people understood this case in that way, more people did, um, they would be really excited about it. I mean, look at how much people took away from Fauci being, you know, the one in charge of COVID and how awful that went. I mean, it it things like that, I think people would really be motivated by that explanation, um, which I haven't heard anywhere else, and I completely agree with. I did want to make one more point on this. Um, Gorsuch brought up an issue specifically that uh well, let me just read two of his quotes. He said it may be true that after today there is no more fourth branch of government, but the fourth branch's power still exist. They have just been reassigned to the president. So his concern seems to be have we now given the president too much power? And he also points out, you know, would Congress have delegated so much power, including legislative and judicial power, to independent agencies had it known that the president would come to control them? How will Congress respond now if realistically it can? And what, if anything, will this court do about it? So, what do you guys think about that point? Is this now giving the president too much power?
SPEAKER_01So, do you remember when we talked about the tariff case, Catherine? AIPA originally had a legislative veto in it. And the legislative veto, which gave Congress sort of a back-end check on these emergency declarations, were declared invalid in a case INSVCHATA in 1983, raising this question: would Congress have ever enacted AIPA without the legislative veto? Well, here's the question: would Congress have ever enacted these statutes without the ability to create agency independence? Would they have ever just delegated it to the single person, this unitary um executive? And I agree with Josh. Everyone, you know, the president is obviously unitary. It's a question of the scope of the president's power. What about statutes uh that had both a legislative veto and an independent agency, of which I think there were some anyway? I don't know if the FTC was an example of that. I don't think it was. Uh, but like, what do we do with Gorsuch's problems? So he won, he thinks we need to reinvigorate the non-delegation doctrine. Congress needs to be doing more legislating. But Josh, it seems to me that this is the keep you up at night question, actually.
SPEAKER_02Yeah, you know, I think Gorsuch is just right, 100% right. We now have a problem. We had a problem before, we now have a different problem. Um The president now has control over the independent agencies. He he can fire the head of the FTC, he can tell the SEC head what to do. He can fire the head of the um, did I say FTC? Well, now I'm gonna say SEC, right? The Securities and Exchange Commissions. And that means he has just, and the SEC makes rules, right? Like law-like rules. And so Trump can command the SEC to make rules that would profoundly change the stock market if he wants. I mean, we we have just had a massive amount of power given to the president. More than the founders would have intended, right? Uh, because they would not have believed that it was even possible or likely with the competition of powers to delegate so much power. So, folks, we have a problem, and I predict that the Supreme Court is going to follow up by reviving the delegate non-delegation uh um doctrine, and that'll be terrific. That'll be awesome. But there'll be one year of Trump's presidency when there's no substantial non-delegation doctrine and presidential control over independent agencies. And I predict we'll see a lot of activity in the in the uh independent agencies uh directed by Trump in the year to come.
unknownExciting.
SPEAKER_01Okay, exciting, Catherine. Catherine says, exciting.
SPEAKER_02Um okay, one wait till it's Kamala Harris or Gavin Newsom with that power.
SPEAKER_01One final point. Okay, Catherine, you have to follow us on YouTube so you can look at Catherine's facial expressions. Um, one final point about this, and then let's move on to the Fed. I just want to clarify since I you know made a point about this on X, this does not apply to the civil service. The civil service are inferior officers or employees, but historically they were inferior officers. The slaughter case applies to principal officers. Inferior officers are officers of the United States under the principal officers. And the Constitution says Congress can vest the appointment of inferior officers in the principal, right? In the head of department. And for a long time it's been held that therefore Congress can restrict the ability of the principal officer to fire the inferior officer. But that's sort of okay because inferior means you have to follow orders. And if you don't follow orders or you're not subject to the control of the principal, then you aren't really an inferior officer. And so you should be able to fire them if they're insubordinate. Um, but it it would allow some degree of civil service protection. The point is whether that's right or wrong as a historical matter, not at issue in the FTC. Uh I'm actually not sure. I'm actually not sure about that. Actually, Josh might be more base than me in this respect. I have a Absolutely.
SPEAKER_02The president should be able to fire uh quote unquote inferior civil service officers. That's a constitutional term, just meaning lower ranked people. It's actually crazy that he can fire the attorney general, but he can't fire the, you know, typical civil service attorney in the Department of Justice. The president should be able to fire all of them.
SPEAKER_01So, in my defense, in my defense, um, I'm not sure though that original case from the 1880s was correct, the US V. Perkins case, um, which said that by vesting the appointment of the inferior in the principal, they can also restrict the ability of the principal to fire. Because again, if the removal power is incident to the appointment power, then you could say that by vesting the appointment in the principal, the removal power necessarily comes with it. And why does it follow that Congress restricts the ability of the principal any more than it can restrict the ability of the president? So I agree with that, but I'm less troubled by it because, under my understanding of inferior officers, if you're insubordinate and you don't follow orders, you should be able to be fired. But then again, like uh having the civil service protections and internal adjudication makes that difficult, right? And so you could still have the deep state, you know, thwart the president. So I agree with that, Catherine. What do you think of the spoils system? You know, I'll throw it to you and then um let's talk about the Fed.
SPEAKER_00I don't know. Well, there is a reason we got rid of it, right? Wasn't it kind of like riddled with corruption? I mean, I don't know, I'm not a historian, but I I kind of it seems like obviously a good idea to me in theory, but wasn't there a reason we got rid of the spoil system?
SPEAKER_01Oh, thank you for setting this up for me. I'm actually, this is like a pet peeve. The reason we got rid of the spoil system, it wasn't exactly like this, was because Because an office holder, a disgruntled office holder, assassinated a president, assassinated James Garfield, I think it was. And so they said, Oh, let's have the civil service. I'm sorry, that hasn't stopped presidential assassinations. The fact that a disgruntled, you know, how about like make the Secret Service? There are like other narrowly tailored solutions to that. Obviously, there had been a movement against the Jacksonian spoil system and the corruption and so on. But like, you know, I don't know, in defense, would the 13th Amendment have been adopted, have been ratified, and voted by members of Congress if the Lincoln administration wasn't able to buy the votes of uh lame duck members of Congress by promising them a bunch of lucrative offices for which they would not have been qualified out of the civil service laws? I don't know. There's a little, you know, corruption isn't all that bad, is it?
SPEAKER_02Yeah.
SPEAKER_01Okay. I can get on board with that.
SPEAKER_02Try being general counsel of a cabinet-level agency and seeing the thousands upon thousands of civil servants who have tenure protections and can't be fired and tell me that they are actually subject to control by an agency head. No way. You actually have a vast, this is the deep state. You have a vast, maybe I am more based here, but but I was in that position. I was deputy general counsel and acting general counsel and chief counsel for the Department of Education for 15 months. And um, we did the RIF, right? We did a reduction in force that cut the department from 4,000 to 2,000 people. Um it was one of the legally most complex and challenging things that I've ever embarked on. And you still couldn't do what was sensible and just be like, well, yeah, we can get into the RIF some other time. We'll never get to the Fed if we talk about the RIF. But suffice it to say, the deep state's a prom, and it's based on the president not being able to remove inferior officers.
SPEAKER_00The RIF sounds like a fancy word for drain the swamp.
SPEAKER_02It means it stands for reduction in force. And um it's it's the only lawful way it with the collective bargaining agreements and the civil service statute and the civil service regulations, it's essentially the only lawful way to really cut people from the federal civil service.
SPEAKER_00All right, so now let's talk about the Fed because as you mentioned at the beginning, Josh, uh it seems like it is different. Clearly, the Supreme Court treated it differently in their decisions. Um, I pulled a quote here from the Chief Justice in his opinion. He said, What matters is that the Federal Reserve remains consistent with the principles that underpin the first and second banks, namely that monetary policy should not be subject to political interference. So that's my question to you guys. Did the court create an exception for the Federal Reserve? Because they seem particularly concerned about political interference in this department, uh, different from the FTC. But at the same time, they basically just decided that Trump should have given her like more of a heads up in my reading of it. Um, so maybe we can touch on that too. And yeah, he like I don't know. My reading was just that she gets Lisa Cook gets more of a heads up, but if you're at the FTC, you can get fired over an email.
SPEAKER_01I I I will say that it goes a little further than that. Um, it does suggest that you, you know, so slaughter could be fired for any reason. I do think they maintain four cause restrictions on Federal Reserve. So even with some notice and process, I don't think that he Trump could fire her for any reason. Uh let me say just a couple things about this, because we only have about 10 minutes and then throw it back to you guys. So the first thing is I do not think there is a Fed exception. Under my view, how would this have all come out? I think the president has the removal power. Somewhat controversially, I don't think the president has a constitutional right to direct and control subordinate officers. In other words, Congress can vest duties in the Secretary of the Treasury. Congress can vest duties in the comptroller of the treasury, Congress can vest duties in the Federal Reserve. The president can fire them for not executing their laws well or for policy disagreement, but he can't. There's no constitutional right to control them. In other words, the officers can say, okay, well, I'm I've been properly appointed. I'm gonna execute the duties as I see fit. If you don't like it, you have to fire me. Now, the president, in my view, can fire them, but there's a political cost to firing them, right? Everybody understands that pardoning someone comes at a much higher and more visible political cost than simply quietly directing that someone not be prosecuted. It's the same thing here. Firing someone is a much higher political cost. Think of the Saturday night massacre when uh Nixon wanted special counsel, Archibald Cox, fired. The two attorneys general refused to do it. So then the third in line became attorney general. This is known as the Saturday night massacre. There are political costs to removal, and the political costs are higher to the extent Congress intended to create these pockets of independence. Uh, and the Fed is one such example. Dare I say this is why the president didn't remove Jerome Powell? It was actually working. It was actually working as it was intended. The president didn't remove him because there would be huge political costs, and the political costs would be higher because we think that it would be improper for the president to interfere. But that doesn't change the constitutional power of the president to do it if he thinks it's worth the cost. So, on the merits of how they did this, first of all, there's a whole question of why did they even resolve it this way? Like the dissenting opinions from Alito and Gorsuch and Barrett and Thomas, it was like this was the interim docket. Okay. The government did not challenge the four-class removal provision. The constitutional question was not briefed. Okay. But in two quick paragraphs, Chief Justice Roberts and Brett Kavanaugh, okay, wanted to say, oh, the Fed's so important and we can't keep the country uncertain. It really doesn't feel like law to me. Okay. But to the extent it was just they wanted to save the Fed, as Josh said at the beginning, any way they could. Okay. On the surface level argument they made, they said it's like, well, this is like the Bank of the United States, the first bank of the United States, the second bank of the United States. But the problem is it's not. The first and second banks were just banks. They engaged in private banking activity. The US had 20% ownership in them. That's true. The US was the biggest depositor. It made the banks very important and influential. It allowed a uniform national currency, right? Uniform banknotes. Uh, and so it was important, but it had no regulatory authority. The Federal Reserve has regulatory authority. I represented someone from the Wells Fargo fake account scandal where they supposedly opened up fake accounts, has nothing for customers, has nothing to do with the Federal Reserve. And yet the Federal Reserve punished them by imposing liquidity caps or reserve caps, right? Like they couldn't, they they had like a minimum reserves that they had to have. So they affected how much they could lend for 10 years. It affected how much money they could actually use for 10 years. That's awesome regulatory power. That is not just a bank, that is regulation. And so this analogy I just think totally falls apart. I think it's absolute nonsense. They shouldn't have decided such a tricky question on the interim docket with no briefing. With no briefing, no briefing on the question.
SPEAKER_02You know, Josh, my so my take is I I like I wrote my friends nine months ago in that text. Um, I always thought this was inevitable. Uh, you know, they were going to save the Fed. And I, you know, fundamentally, I I think legal doctrine is very, very manipulable. And the Supreme Court has one cardinal principle, which is we will be practical. And uh they thought it was important to get rid of independent agencies and to save the Fed, and they just were like, we're gonna find a way. And this, you know, analogy to the first and second bank is very unconvincing and very ad hoc from a constitutional standpoint, from a principled standpoint. Um, but you know, Brett Kavanaugh really sort of, he says in his concurrence, quote, I would not risk destabilizing the U.S. economy. That was the motivation here. So that they think that A, getting rid of making the Fed subject to political control would destabilize the U.S. economy, and leaving the issue unresolved for more briefing would destabilize the U.S. economy. And so they were just like, we are going to settle the Fed issue now, and we're gonna do it in a way that um um protects the the Fed's independence and therefore the U.S. economy. It was a practical decision with a kind of a veil of legality kind of uh pulled over it. And I guess what I want to ask is, is that so bad? I mean, it is not constitutionally principled, totally on your side lawn. But are they right? Would the failure to pret to make an exception for the Fed lead to inflationary spirals around election time? Would failing to resolve it lead to market reactions to uncertainty about you know the future of the Fed chairman? And are you, Elon, being too abstract and too principled and too much of a professor? And should we all just be a little more practical and just you know, hey, we needed an exception for the Fed. Independent agencies are bad except for the money supply. What do you think?
SPEAKER_01I would say I'm happy being practical, as Catherine said. She always gets to the nub of it. Like using power to the extent we can within the bounds of reasonable interpretations of the law. Like, you know, I try to get the law right, first and foremost, but there, you know, is some ambiguity. But the problem with that approach, generally, Josh, is I just don't share the priors. I don't share the underlying premises of Kavanaugh and Roberts here. You know, it's like, oh, would the Great Depression have not happened if we had an independent Federal Reserve? Oh, wait, we had an independent Federal Reserve, and they caused the Great Depression by tightening their grip on the monetary supply. It turns out experts don't know anything, like more than we do. Certainly government experts don't. So I just don't share the underlying premise. You know, uh, did agency independence stop the Obama-era Federal Communications Commission from imposing net neutrality rules after Obama said, hey, I think we should have net neutrality rules. Did it stop quantitative easing during the Biden administration? Like, I just don't uh buy the underlying premise, A, that there's such a thing as neutral expertise as opposed to political actors all the way down. And I certainly don't believe that the Fed is so expert that they don't grievously blunder many, many times, such that, you know, I think it might be better to have some degree of political control.
SPEAKER_00Wow, based. I agree. I think they're the idea that they're neutral is um is false. I think going back to your point you made, Josh, earlier, none of these branches are politically neutral. And I think the Fed is included in that. And I think too, to your point, Elon, that the political pressure is working when it comes to Jerome Powell. I mean, look at how many threats that Trump made at Jerome Powell and it never worked. So, I mean, I don't know. I think for now, um, it's working, but I do, I do agree with your point, Josh, that there's clearly something a little bit different about the Fed. And I certainly don't want to become whatever country you mentioned that is just constantly um in like inflationary and uh like bad periods because of the president.
SPEAKER_02It's just a common pattern in a lot of Latin American democracies where you don't have an insulated Federal Reserve system and you get these like I I don't know the details really, but these spikes of inflation around election time. Right.
SPEAKER_01All right, Josh, we have two minutes. Bring us home. Why are these so partisan, these decisions? What do you think? And final thoughts.
SPEAKER_02I mean, it's interesting, right? Because um you see a consistent partisan split in these cases, um, conservatives versus progressives. And in this case, in the big slaughter case, you had a 6-3 split with um, you know, the six conservatives on one side about the FTC and the three progressives on the other. And you know, I think about it, progressives and conservatives have lots of debates in this country that we all understand why the two sides are what they are about like trans rights or racial issues or policing or whatever, right? Uh but the independence of agencies, like really, why? I mean, is it genuinely that the left believes so strongly in Congress's authority vis-a-vis the president to uh structure the executive branch? Is it really that conservatives believe so strongly in presidential authority and are so skeptical of Congress's? Like, that just doesn't track my understanding of left and right in this country. So I want to throw it to you guys. What is really going on here? Why is this a partisan issue rather than a fairly, you know, academic structure of government issue that creates the usual kind of strange political bedfellows of many such structural issues? My view is that underneath the structural dispute, everyone recognizes the point I was making before that administrative power is expert power, expert power is left-wing power. And so the judges, um, the progressive judges are trying to preserve a structure that embeds progressive left elite power in the very heart of the government, no matter who wins the elections. And the conservatives, the right, are trying to undo that structure. Um, and everyone underneath, like these sophisticated judicial actors, they appreciate that this is fundamental like this is the deep fight between left and right. But what do you think?
SPEAKER_00Well, I agree. The independent agencies, like we said, are all totally political actors. And so when the justices on the left say, you know, oh, they're non-political uh agencies, and then they all vote in locksteps on one side, I think that completely goes against their own point. They're clearly everyone involved here is a political actor, which I think is fine, but we should just admit it and stop pretending that anyone here is not really a political actor.
SPEAKER_01And that is the base point with which Catherine actually began our episode and ended our episode. That's all we have time for today. Please, please rate us on Apple and Spotify. Like and subscribe. The early ratings are so very important. We'll see you next time.