Tuesday, June 30, 2026

Independent U.S. Regulatory Agencies: Undermining the Chief Executive

On June 29, 2026, the U.S. Supreme Court ruled that the federal president has the authority to terminate the employment of heads of independent federal agencies at will, rather than only for cause. The latter requirement (i.e., due cause) would still hold for the Federal Reserve, which raises the question of whether a central bank should be distinguished from regulatory agencies. The value in buffering monetary policy from political pressure is why the Federal Reserve is not part of the executive, legislative, or judicial branches of the U.S. government, but is instead an independent central bank within that government. As a consequence, monetary policy does not require approval from either the U.S. president or the Congress. Hence, the “for cause” requirement for removing someone from the Fed’s board of governors cannot be disagreement with the person’s preferences or decisions regarding monetary policy. As for independent regulatory agencies in the executive branch, their independence undermines the unitary executive as well as the president’s role in implementing existing law.

As with virtually any institutional arrangement in government, drawbacks are paired with benefits. In the case of the Federal Reserve, the main drawback lies in the difficulty in coordinating fiscal and monetary policy because Congress and the White House decide fiscal policy while monetary policy is decided by the Federal Reserve, which is buffered from pressure from all three branches of the federal government. So a fiscal policy could be in place to stimulate the economy even though high interest rates slow down economic growth. In the 1970s, for example, the term “stagflation” was coined because high inflation existed along with economic stagnation. During that decade, fighting inflation by monetary policy would have run counter in its economic effects to stimulating the economy by fiscal policy. Typically, inflation and stagnation alternate rather than occur at the same time. Paul Volker, as chairman of the Federal Reserve in the early 1980s, used monetary policy to reduce inflation even though the high interest rates exacerbated economic stagflation and, without sufficient fiscal stimulation to counter the higher interest rates, quickly produced a recession in President Reagan’s first years in office. So there is value economically in coordinating monetary and fiscal policy, and buffering the Federal Reserve from pressure from Congress and the White House (as well as not allowing a Federal Reserve chairperson to dominate those two branches) comes with a price. An iconic line from a European in the film, The Godfather, Part III, is relevant: “All our ships must sail in the same direction.” Separating monetary and fiscal policy institutionally comes with a cost in that ships could be going in opposite directions, producing chaos.

The Federal Reserve is a central bank, and therefore it is not an independent regulatory agency in the executive branch. The very notion of an independent regulatory agency is problematic constitutionally because if such an agency is free of a president’s control and yet still within the executive branch, then separation of powers prohibits direct control by Congress or the judiciary. The Court “held that presidents have free rein to fire agency heads at will, despite federal laws that require a cause for such dismissals” and a 1935 Supreme Court case known as Humphrey’s Executor that held that presidents could not fire heads of federal agencies without cause.[1] That precedent, which the Court overruled, is problematic because assuming a regulatory head does nothing for cause, the person would be free to make regulatory policy at will even if the chief executive officer of the government, the president, disagrees. Because the federal presidency is an office elected by electors of the member-state held to the popular votes in the respective states whereas the head of a regulatory agency is appointed, regulatory agencies being independent of the president incurs a democracy deficit. In other words, the head of an independent agency has too much power given the amount of accountability that is available if termination of employment for cause is not an option due to good behavior.

Furthermore, carving out independent turfs within the executive branch denies the unitary nature of that branch that is implied by the president’s title as chief executive officer. Because the presidency is an elected office, heads of independent regulatory agencies within the executive branch who resist presidential pressure obstruct the “will of the people” from being implemented. Ideally, besides presiding as a neutral figure-head representing the United States of America, the presidency is tasked with implementing law, including defense. Hence it is Congress that has the constitutional power to declare war, for example, and the president is obliged to implement that declaration as the commander in chief. The role of implementing is hardly glamorous, and it has tended to be given insufficient time and energy by presidents who have been more interested in influencing the enactment of law, which is the task of the legislative branch, even though the veto is a negative power and thus designed to be a check on Congressional abuses of power rather than a mandate to legislate in a positive sense.

Ironically, the very existence of independent regulatory agencies with directors free from presidential pressure has freed up presidents from their implementing role, and thus enabled them to spend more time and energy on legislating new law rather than implementing existing law.  Unlike formulating new law, implementing existing law, including declarations of war, is consistent with the neutrality that a figurehead needs to be credible and thus to represent the United States as a whole. That such neutrality politically has been disregarded is evinced when American citizens state that a sitting president “is not my president.” The baleful warnings of expansive presidential power made by Arthur Schlesinger in his seminal 1973 book, The Imperial Presidency, would be less of a concern were presidents willing to constrain themselves to focus on being a figure-head uniquely credible enough to represent the United States as a whole rather than just one political party, and implement existing law by running the executive branch (including the defense department), rather than usurp Congress’s legislative prerogative as per the separation of powers. The Court’s 2026 decision allowing presidents to fire heads of previously independent regulatory agencies in the executive branch is a step in the direction of presidents attending more to functioning as the chief executive of the U.S. federal government when not called upon to preside.