The Supreme Court has been systematically dismantling the modern administrative state. In several decisions, the justices have pushed back against the idea that executive-branch agencies can be insulated from presidential oversight. The constitutional principle is straightforward: Executive power must be accountable to the president.
Yet the court has hesitated to apply this logic to the Federal Reserve, easily the most important independent agency. That exception is increasingly hard to defend.
Recent Supreme Court cases such as Seila Law v. CFPB and Collins v. Yellen reject the notion that Congress may create powerful agencies whose leaders are shielded from removal by the president. The Court has been clear that technocratic expertise, political convenience, and even good policy outcomes do not override the Constitution’s separation of powers. If an agency exercises executive authority, it must ultimately answer to the elected chief executive.
Monetary policy would seem to fit squarely within that framework. The Fed regulates banks, influences the availability and price of credit, and controls the nation’s ultimate settlement asset. These decisions materially shape markets for labor, housing, and securities, which include the market for Treasury debt. If this does not count as executive power, what does?
And yet the Court appears willing to carve out an exception for the central bank. Defenders of Fed independence point to history, especially the First and Second Banks of the United States, and to the dangers of presidential meddling with monetary policy. They warn that subjecting Fed decisions to democratic accountability would invite political interference, with the likely result of excessive dollar depreciation.
But these are not constitutional arguments. They are prudential ones. They do not change the basic matter of what the Constitution says about executive authority. If the Constitution rules out conventional central banking, it is central banking that needs to change, not the Constitution.
History alone cannot justify departures from constitutional structure. Contrary to the Supreme Court’s claims, the First and Second Banks of the United States bore little resemblance to today’s Federal Reserve, as even Fed Chair Powell recognized. They lacked modern macroeconomic stabilization powers, operated under government charters, and existed for limited terms. Invoking them as precedent for an unaccountable central bank with sweeping discretionary authority is an historical solecism.
Nor can expertise supply a constitutional warrant. The Supreme Court has repeatedly rejected the idea that technical competence licenses insulation from political control. If Ph.D. economists qualify for special treatment, why not epidemiologists, climate scientists, or national security analysts? The argument has no limiting principle.
The real issue, though perhaps uncomfortable, is simple: Either the president runs the executive branch, or he does not.
If we believe that presidential interference with monetary policy is so dangerous that it must be prevented at all costs, the Constitution offers two solutions. One is to place the Federal Reserve firmly under executive control and accept political accountability for monetary outcomes, just as we do for every other entity that enforces laws passed by Congress. The other is to eliminate discretion altogether by binding monetary policy to strict, automatic rules—ones that leave no room for judgment calls by policymakers, however credentialed.
What the Constitution does not permit is what we have now: discretionary macroeconomic governance by financial insiders who answer to no elected official.
The Fed’s defenders often invoke “constrained discretion” as a middle ground. But discretion is still discretion. Choosing inflation targets, interpreting economic data, timing interventions, and deciding when to bend or suspend rules all involve judgment. Those judgments often have significant distributional consequences, benefiting some groups at the expense of others. Exercising such power without political accountability is precisely what the Court has rejected in other contexts.
To be sure, markets have grown accustomed to an independent Fed. But market expectations do not confer constitutional legitimacy. Investors once took Chevron deference and expansive agency authority for granted, too. Stability is desirable, but it cannot come at the expense of constitutional government.
The uncomfortable truth is that the Federal Reserve survives not because it fits neatly within our constitutional order, but because the alternative frightens us. Presidents might pressure the Fed to run the printing presses before elections, just as President Nixon had Fed Chair Arthur F. Burns do. Yes, inflation might follow. These are real concerns—but they are not legal ones.
If discretionary monetary policy is incompatible with democratic accountability, the answer is to reform monetary institutions so that discretion is radically constrained, not exempt those institutions from constitutional scrutiny. Alternatively, we should rethink whether a centralized monetary authority is compatible with the letter and spirit of constitutional law in the first place.
The Supreme Court has rightly insisted that the separation of powers means what it says. If that principle stops at the doors of the Federal Reserve, it is not a principle. It is an exception born of fear. And fear is a poor foundation for constitutional self-government.
