Can Trump fire Jerome Powell? The Supreme Court may soon offer some clues

President Donald Trump’s call for the “termination” of Federal Reserve Chair Jerome Powell landed Thursday as the Supreme Court is weighing a fast-moving appeal over two independent agencies that has increasingly become a proxy battle for control of the nation’s powerful central bank. A decision in the emergency appeal could enable Trump to assert control over independent agencies as he tries to subsume their power within the executive branch – or it could significantly slow that effort. At issue for the Supreme Court is Trump’s firing of senior officials at two independent agencies that oversee workplace protections for federal employees. Those officials, who are fighting to be reinstated, say that if Trump wins in the labor boards case, it will swing open the door for an overhaul of the Federal Reserve. “Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!’ Trump posted Thursday on social media. “Powell’s termination cannot come fast enough!” The Trump’s administration’s underlying goal, it made clear in a letter to Congress earlier this year, is to overturn a 1935 precedent that that allowed Congress to require presidents to show cause – such as malfeasance – before dismissing board members overseeing independent agencies. Such a decision could have vast implications for a host of agencies Congress set up to be independent from the political whims of the White House. But Trump has argued that neither courts nor Congress should stand in the way of his efforts to capture more control of those agencies by firing their leaders. “The president should not be forced to delegate his executive power to agency heads who are demonstrably at odds with the administration’s policy objectives for a single day – much less for the months that it would likely take for the courts to resolve this litigation,” Solicitor General D. John Sauer, the Trump administration’s top appellate lawyer, told the Supreme Court earlier this month. A fight over footnotes The litigation over the two labor agencies will likely ultimately tee up a question about a key 1935 Supreme Court precedent, Humphrey’s Executor v. US, that allows Congress to put some distance between the White House and the independent agencies. Overturning that ruling would give presidents immense power to sweep away from service officials who enforce anti-trust laws, labor rules and disclosure requirements for publicly traded companies. The Supreme Court’s conservative majority has signaled skepticism in recent years about the for-cause protections Congress sometimes includes for executive branch officials. Four years ago, the court’s conservatives held that such protections for the head of the Consumer Financial Protection Bureau violated separation of powers principles. That agency, which Trump has continued to target in his second term, oversees regulations intended to protect consumers who hold credit card debt, mortgages and financial products. The president’s power to “remove – and thus supervise – those who wield executive power” flows directly from the Constitution, Chief Justice John Roberts wrote for the majority. “The CFPB director has no boss, peers, or voters to report to,” Roberts wrote. “Yet the director wields vast rulemaking, enforcement, and adjudicatory authority over a significant portion of the US economy.” But the court’s 5-4 decision left Humphrey’s in place, with Roberts noting that it applied only to independent agencies led by a single director rather than multi-member boards. Conservative Justice Clarence Thomas, joined by Justice Neil Gorsuch, would have gone further. They framed the precedent as a “direct threat to our constitutional structure and, as a result, the liberty of the American people.” “In a future case,” Thomas wrote, “I would repudiate what is left of this erroneous precedent.” Perhaps most notably, the court used a footnote in that decision to nod at the idea that the CFPB might be different from the Federal Reserve. “The CFPB is in an entirely different league” from the Federal Reserve, that footnote read. “It acts as a mini legislature, prosecutor, and court.” In another footnote last year, conservative Justice Samuel Alito sought to further explain why the Federal Reserve is unlike other federal agencies. The Fed board, Alito wrote, “is a unique institution with a unique historical background.” The Fed was created in response to a “string of financial panics” and represented an “intensely-bargained compromise between two insistent and influential camps: those who wanted a largely private system, and those who favored a Government-controlled national bank.” The funding of the central bank, he said, “should be regarded as a special arrangement sanctioned by history.” Trump takes softer stance in court That is an argument the Trump administration has leaned into heavily to brush aside concerns that a ruling for Trump in the labor cases would give him free rein over the Fed. “While respondents focus heavily on other agencies such as the Federal Reserve Board, they ignore [the court’s recent] observation that the Federal Reserve’s tenure protection presents a distinct question with a unique historical pedigree,” Sauer told the Supreme Court in a brief this week. The administration, in other words, is balking at the idea that the president would necessarily go after the Fed if he wins in the fight over the labor boards. Presidents of both parties have long taken a hands-off approach to the central bank and federal law demands the system’s seven governors can be fired only for cause, not policy disagreements. Weakening the Fed’s independence would not only rattle investors who are already anxious about Trump’s tariffs, but it could destroy the central bank’s credibility, which it needs to fight inflation. That’s as important as ever, with economists expecting tariffs to lead to higher prices. Countries with independent central banks generally have lower inflation. The emergency appeals pending at the Supreme Court – while exceedingly important in their own right – deal with two boards that most Americans rarely encounter, the NLRB and the Merit Systems Protection Board. By raising the specter that Trump could use a decision in that case to impose wholesale changes to the Federal Reserve, the board members are elevating the stakes for the 6-3 conservative court. “Of particular concern, the independence of the Federal Reserve would become uncertain – a situation that would have dire repercussions for the market,” Gwynne Wilcox, who had been serving as chair of the National Labor Relations Board, warned the Supreme Court this week. Likely sensing the court’s reticence to mess with the Federal Reserve – and potentially be blamed economic catastrophe – Trump officials have eagerly insisted there is no connection between the NLRB and the Fed. “That question,” the Department of Justice told the court in a brief on Wednesday, “is not at issue here.” Just how much leeway a majority of the court is willing to give Trump – especially given the administration’s aggressive reading of the court’s opaque decision in a recent immigration case – remains to be seen. The court isn’t considering the underlying merits of the case, only what to do with Wilcox and Cathy Harris, the former chairwoman of the MSPB, while their legal cases continue. In a temporary order earlier this month, Chief Justice John Roberts allowed Trump to keep both Harris and Wilcox removed from their posts for now. The high court could rule in the case of the labor boards at any time. Powell was first appointed Fed chair by Trump in 2018, then was later reappointed by former President Joe Biden in 2022. Trump’s gripes with Powell, going as far back as 2018, have mostly been centered on the Fed not cutting interest rates whenever the president sees fit. In recent years, Trump has called Powell “the enemy” and accused him of “playing politics.” On Thursday, Trump said “Powell’s termination cannot come fast enough!” But the Fed’s decisions, with Powell at the helm, have always been based on economic data in striving for the central bank’s dual mandate of maximum employment and stable prices — even if those decisions don’t sit well with politicians. That sacrosanct independence has proven to be crucial for the Fed to successfully fight inflation and unemployment whenever necessary. CNN’s Bryan Mena contributed to this report.