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Supreme Court Expands Presidential Power to Fire Agency Officials

May 26, 2025

The Supreme Court has ruled that President Donald Trump can remove Democratic appointees from federal labor boards without cause, significantly expanding presidential authority over independent agencies. While granting the president broader firing powers, the Court specifically exempted the Federal Reserve from this ruling, temporarily easing financial market concerns about central bank independence.

The Ruling

In a decision with major implications for executive power, the Supreme Court upheld President Trump's dismissal of two Democratic appointees: Gwynne Wilcox from the National Labor Relations Board (NLRB) and Cathy Harris from the Merit Systems Protection Board (MSPB). The Court ruled that Trump doesn't have to rehire these officials while they continue their legal challenges against their terminations.

The majority opinion declared that "because the Constitution vests the executive power in the president, he may remove without cause executive officers who exercise that power on his behalf, subject to narrow exceptions recognized by our precedents."

Notably, the Court created a specific carve-out for the Federal Reserve, describing it as "a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."

Dissenting Views

The Court's three liberal justices - Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson - strongly dissented. Justice Kagan criticized the majority's Federal Reserve exception as coming "out of the blue" and suggested a simpler approach would have been to deny Trump's application based on existing precedent.

The dissenting justices argued that the majority effectively allowed Trump to overrule decades-old Supreme Court precedent, specifically the 1935 Humphrey's Executor decision that has long protected agency independence by limiting presidential power to fire independent agency officials without cause.

Impact & Analysis

This ruling has significant consequences for multiple groups of Americans:

  • Federal workers and labor unions now face delays in having grievances processed and labor disputes resolved. Without these officials, their respective agencies lack a quorum and cannot fully function, effectively weakening worker protections and union rights.
  • Presidential appointees to independent agencies now face greater vulnerability to removal based on political differences rather than performance issues, potentially undermining agencies' ability to make decisions free from political pressure.
  • Financial markets have been temporarily reassured by the Court's explicit exclusion of the Federal Reserve from this ruling. According to LH Meyer analyst Derek Tang, "This view of the Supreme Court really does ease my worries about their inclination to extrapolate from the NLRB cases to the Fed so I breathed a sigh of relief."

The decision signals a significant shift in the balance of power between the presidency and independent agencies that were designed by Congress to operate free from political interference. It also suggests the Supreme Court may be receptive to Trump's broader claims of presidential authority over hiring decisions if the case returns to the high court.

What's Next

The affected agencies will continue operating with limited functionality until the broader legal challenge over these dismissals is resolved. Congress may consider legislative responses to protect agency independence, while legal experts will closely analyze how this ruling might affect other independent agencies like the FCC, FTC, and SEC.


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