Why Trump will checkmate the Court when he fires Powell

The Trump administration has suddenly pretended to be Very Concerned about the expense of renovating the Federal Reserve, even though much of the expense was due to its own initiative:

President Donald Trump has looked to the marble finishes and hefty price tag of the Federal Reserve headquarters to claim grounds to fire Chair Jerome Powell, with whom he has tussled for years over interest rates. But the extensive use of marble in the building is, at least in part, the result of policies backed by Trump himself.

As the Fed moved forward with plans to renovate its Great Depression-era headquarters in Washington during Trump’s first term, it faced concerns in 2020 during a vetting process involving Trump appointees, who called for more “white Georgia marble” for the facade of the building.

The key phrase here, needless to say, is “claim grounds.” Trump needs a fig leaf to get around the Supreme Court’s “the executive is unitary except, uh. the Federal Reserve” shadow docket ipse dixit, and this will probably do. Stern and Lithwick explain the dynamic:

Mark Joseph Stern: Under federal law, Trump cannot remove Powell over a policy disagreement. Federal law expressly allows for the removal of the Fed’s board members only for “cause”—something like abuse of office or malfeasance. That means Trump can’t just sack Powell because Trump wants to slash rates and Powell wants to keep them steady.

Ninety years ago, in a case called Humphrey’s Executor, the Supreme Court unanimously upheld this kind of protection against removal. But this administration rejects the validity of that precedent and has already fired a bunch of agency heads who are also protected from removal under federal law. The current Supreme Court rewarded him for doing that back in May when, by a 6–3 vote, the majority greenlit Trump’s illegal removal of Democratic members serving on two very important federal agencies. That decision seemingly signaled that Humphrey’s Executor is dead and that this Supreme Court has fully embraced the ahistorical fiction of a “unitary executive” who can fire pretty much any official within the executive branch, for any reason. But in that very ruling, the majority also randomly declared that the Federal Reserve is somehow different from every other agency, and that its members alone can still be protected from presidential termination. So based on the whispers that the Supreme Court is passing down to us, it sure seems like Trump shouldn’t be able to fire Powell.

Let’s read exactly what the court said, because it’s hilarious: “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.” That’s the totality of the explanation for why the Fed alone gets independence. There is no coherent logic here!

Absolutely not. This carve-out doesn’t make any sense; the Fed’s members clearly exercise as much executive power as other agencies, and the board of governors is not actually “quasi-private.” There is no precedent that indicates there is some secret, special reason why the Fed’s members—and nobody else—should be insulated from partisan removal. So the caveat reads like the conservative justices begging Trump: “Please, please, please don’t mess with the Fed and fire Powell because we don’t want you to tank our 401(k)s.” But I think that Trump reads that opinion as a dare to see just how far he can push the conservative majority. And maybe he sees it as an opportunity to prove that the conservative justices will stand down in a direct conflict with his administration. Even if they’ve puffed up their feathers and put on a show of defending independence, Trump can just barrel them over. And that is probably an accurate read of the situation.

This really does drive home the unifying theory of why the Roberts Court Six continues to give way to Trump’s lawlessness. The theory goes that they’re holding their power in check, doing a carefully calibrated dance in which both sides are daring each other to cross some line while clinging to their own prerogatives and power. The court says: OK Mr. President, we’re going to give you 96.2 percent of what you want, but we are really cutting you off there. And the Fed is a red line. But it feels as though Donald Trump doesn’t care.  

I do think this is a game of chicken, and I think Trump will win. Here’s the problem the Supreme Court has created for itself. Federal law, as I said, allows removal of Fed members for “cause.” And Trump keeps reminding us that Powell is overseeing a renovation of the Fed’s headquarters in D.C. that’s gone way over budget. Trump claims there may be fraud, though there’s no evidence of it. His allies are planting this seed: Congressional Republicans have been grilling Powell over the renovation, and Russell Vought—director of the Office of Management and Budget—has been pushing Powell to explain himself. Powell has done everything he can, even asking the Fed’s inspector general to review the project.

But if Trump does fire Powell, he’ll probably cite the Fed’s expensive renovation as pretext, say it’s proof of malfeasance and mismanagement, call that sufficient “cause,” and then dare the courts to say he’s lying. That would cause a huge headache for the Supreme Court because the justices will know it’s bogus pretext. But in a little decision called Trump v. United States, the presidential immunity case from last term, the same conservative justices already ruled that courts cannot probe a president’s true motivations or subjective intentions when he commits an official act. And then they said that firing executive officials is an official act! So the majority has already given Trump a path to pretend to fire Powell for cause, then insulate its decision from judicial review. I think the majority has really boxed itself in with this self-defeating jurisprudence, claiming that the president can’t fire the Fed chair over policy disagreements, then giving him the tools to do just that.

In most cases, it wouldn’t be accurate to say that the Republicans on the Supreme Court are “giving in” to Trump — they generally want what he wants. In this case, they presumably really don’t want Trump to fire Powell, but Trump knows and empty bluff when he sees one, and the “distinct historical tradition” bullshit is definitely that. He thinks they’ll fold if he pretends to comply with the one-sentence carve-out and the Court isn’t going to stand in his way.