New Trump order takes aim at autonomy of independent agencies

A new executive order signed by President Donald Trump on Tuesday seeks to give the White House more control over government agencies that operate independently. The list of agencies the order is expected to impact includes the Federal Election Commission, the Federal Communications Commission, the Securities and Exchange Commission and the Federal Trade Commission, among others. There is, however, An exemption, however, has been made for the Federal Reserve’s handling of interest-rate policy.

Sarah Binder is a professor of politics at George Washington University and a senior fellow at the Brookings Institution. She joined “Marketplace” host Kai Ryssdal to talk about what the executive order could mean for the independent agencies and the Federal Reserve.

An edited transcript of their conversation follows.

Kai Ryssdal: With the understanding that Congress did set up these agencies as independent agencies, I guess the first question is, can the president do what he is purporting to do here?

Sarah Binder: Well, the president can do it if nobody stops him, right? It’s a power grab this time at the expense of what we call these independent agencies. The question is, will anyone in Congress stand up to him? And, at some point, this will certainly end up before the federal courts, and so will the courts be able to constrain the president? That we just don’t know.

Ryssdal: Help us understand, would you, why Congress decided decades and decades ago that this economy needs independent regulatory agencies to help this economy run.

Binder: Well, keep in mind that the very first of these independent agencies were really the end of the 19th century, and it was a period like today of pretty high partisanship, intense electoral competition, frequent shifts in party control. So [the Progressive movement was] looking for ways to insulate these sort of implementers of law from politics and especially from presidential whims. And so the solution is Congress says, let’s find a way to insulate the decision-makers — who the leaders are and how they wield their power— but also the decision-making, like how much review is done by Congress and the president and the courts over these agencies.

Ryssdal: It will not surprise you, even though this order purports to cover the Federal Trade Commission, the Federal Communications Commission and the SEC and a bunch of them, my eyes went to the Federal Reserve, and that section that is in this order saying, “This covers the Federal Reserve, except for its monetary policy operations.” The catch, of course, with the Fed is they do lots of other stuff that stabilizes this economy, right? They are famously the lender of last resort in a crisis. And I guess I wonder how concerned you are about the gray areas that have to do with the guts of this economy.

Binder: Well, that is quite problematic because it’s really hard to say. Even on something like emergency lending, like, where does monetary policy start and where does supervision and regulation, where does that begin? So emergency lending, stabilizing a financial crisis, well, that’s also part of the Fed’s ability to try to control inflation. So it’s hard to say where are the boundaries of where the president is going to be sticking his nose into those decisions. And of course, we expect that Congress tells the Fed you are in charge of financial stability — at least one of the agencies in charge of financial stability — and the Fed uses monetary policy to meet that regulatory goal. So I think there’s a lot of question marks from that executive order about how much autonomy the Fed really can keep with letting the president and [the Office of Management and Budget] anywhere into its decision-making.

Ryssdal: Step back for a minute here then and talk about the other and the many institutions of this economy that are now going to be subject to much more direct presidential control. What is at stake for this economy?

Binder: Well, the first thing at stake is that it will make it harder for the Fed to keep its eyes on and try to control inflation, which still isn’t down to its 2% target, but also some general sense of financial stability that banks are being regulated across the board, big banks, small banks, community banks, but evenhandedly. And I think whenever you have some stronger tinge of presidential control, people are going to wonder, like, “Is that a legitimate exercise of power? Am I better off? Do I know what’s going to happen in the future?” And certainly, in an economic realm, that’s put at risk by injecting presidential and partisan interests into the decision-making of these agencies.

Ryssdal: Do you think this is a legitimate exercise of presidential power?

Binder: Well, I think it grabs power from Congress, who set up the rules of these agencies in the first place. I think, in my view, it is patently unconstitutional, right? Because the executive order would allow the executive branch to decide, how are you going to spend that money? Those are decisions that Congress either gives to the agency or certainly sets the budget for many of them, and expects those monies to be spent in the ways Congress directs. So grabbing that power seems to be you’ve taken an equal branch’s key authority, you’ve just taken it away.

Ryssdal: Let me take you sideways for a second since you went there. Are you surprised that the Article 1 branch, that is to say that Congress is letting its power be taken so easily by the Article 2 branch, the executive?

Binder: Well, when I teach undergrad Congress, we always start, “It’s Article 1. Why is it there? It’s the most important institution.” But it has to stand up for itself. The Constitution, it doesn’t protect itself. It’s not self-enforcing. And so this is not the first time that Congress has sort of stepped back and watched as presidents have encroached on their powers. Sometimes Congress does it on purpose. “Hey, president, here’s some power to give sanctions. Here’s some power to negotiate trade deals” and so forth.

Ryssdal: Tariffs also, by the way, right?

Binder: For sure, and Congress does that explicitly. Much of this is Congress’ doing, but certainly this is Trump really, really going much farther than we’ve ever seen other presidents do.