Trump’s enemies push this line—that Trump is threatening to undermine Fed independence—because they see it as a way of defending other agencies. It’s a sort of slippery slope argument: if you let Trump boss around US AID, the Fed is toast.
But I don’t think that’s right.
But I don’t think that’s right.
https://twitter.com/semaforben/status/1894386318592901183
The logic that it is unconstitutional to shield the CFBP or the FHFA from executive control does not imply that it is unconstitutional to shield the Fed in a similar way. The resemblance is only superficial.
What makes the Fed different? At least when it comes to monetary policy, it is carrying out a role assumed by the constitution to the legislative branch.
Article I, Section 8 of the Constitution gives Congress the power to “coin Money [and] regulate the Value thereof.”
Article I, Section 8 of the Constitution gives Congress the power to “coin Money [and] regulate the Value thereof.”
This is different from agencies tasked mainly with executive functions. In those cases, rules that purport to insulate agencies from presidential control are likely to be unconstitutional encroachments on executive power, violations of the separation of powers.
The Fed’s independent control of monetary policy is not an encroachment case at all because it is not exercising executive power.
It is possibly a nondelegation case. But the remedy would be to give more authority to Congress, not Trump or the president.
It is possibly a nondelegation case. But the remedy would be to give more authority to Congress, not Trump or the president.
Courts have long recognized that Congress has the power to delegate certain functions to expert bodies, provided there are “intelligible principles” guiding their actions (J.W. Hampton, Jr. & Co. v. United States, 1928).
Arguably, the Fed might have been an unconstitutional delegation as originally structured. But Congress likely cured this by assigning the Fed a dual mandate of price stability and maximum employment and requiring semiannual testimony.
The constitutionality of the Fed may also be strengthened by the FOMC’s structure. Instead of single director running things, it is (at least formally) controlled by governors and presidents with independent authority. They can overrule the chairman.
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