Could the Supreme Court’s Tariff Decision Be Applied to the Fed?

Could the Federal Reserve be next? We don’t want to get ahead of our skis, but that’s the first question that popped into our mind following the Supreme Court’s conclusion that President Trump’s tariff campaign overstepped the Constitution, usurping for the executive branch powers that are granted in the parchment only to the legislature. The tariffs threatened, Justice Gorsuch writes, the “continual and permanent accretion of power in the hands of one man.”The court’s main opinion is penned by Chief Justice Roberts. Justice Gorsuch is writing in a concurrence. “For those who think it important for the Nation to impose more tariffs, I understand that today’s decision will be disappointing. All I can offer them is that most major decisions affecting the rights and responsibilities of the American people (including the duty to pay taxes and tariffs) are funneled through the legislative process for a reason,” he writes.“Yes,” Justice Gorsuch adds, “legislating can be hard and take time. And, yes, it can be tempting to bypass Congress when some pressing problem arises. But the deliberative nature of the legislative process was the whole point of its design.” That’s music to our ears. We have been arguing something similar in respect of monetary policy, which was delegated years ago from Congress to a supposedly independent central bank.The decision today on tariffs centers on the administration’s use of the International Emergency Economic Powers Act “to unilaterally impose unbounded tariffs,” as Chief Justice Roberts puts it in the majority opinion. Yet the law gives presidents emergency power to “regulate” trade, but, the chief justice says, “contains no reference to tariffs or duties.” The law, as a result, the majority asserts, “does not authorize the President to impose tariffs.”The majority opinion is informed by the Constitution’s separated powers. “Having just fought a revolution motivated in large part by ‘taxation without representation,’” the chief justice writes, the Founders assigned solely to Congress “access to the pockets of the people,” as Madison put it in 48 Federalist. The chief justice adds that the Framers “did not vest any part of the taxing power in the Executive Branch.”This assignment of federal taxing power to the legislature means, the chief concludes, that a president “must identify clear congressional authorization to exercise it.” The majority finds this lacking. The majority of six reaches this conclusion even though three of the justices argue that the case could be decided based on the text of the law. Chief Justice Roberts and Justices Gorsuch and Amy Coney Barrett are more focused on the constitutional issue.The three dissenters today, Justices Samuel Alito, Brett Kavanaugh, and Clarence Thomas, urge judicial modesty in this dispute. “The tariffs have generated vigorous policy debates,” Justice Kavanaugh reckons, but “those policy debates are not for the Federal Judiciary to resolve.” He finds, too, that other federal laws could give Mr. Trump power to set duties, limiting the effect of today’s ruling. Justice Thomas finds Congress can delegate its tariff power.Yet the constitutional implications of the majority’s ruling make it hard to avoid other questions, like the Federal Reserve. After all, the monetary powers of the federal government, were, like the authority to tax, assigned in Article I to Congress. These include power “to coin money, regulate the value thereof, and of foreign coin,” along with power “to borrow money on the credit of the United States” and to “fix the standard of weights and measures.”That’s the context in which to view the debates over the independence of the Fed on monetary policy. The Framers granted the monetary powers to Congress with the understanding that it was the most political branch — and therefore the most accountable to the voters. Today’s affirmation that the tariff power resides with the legislature presents a precedent to restore the Framers’ constitutional design on monetary policy, too.

Could the Supreme Court’s Tariff Decision Be Applied to the Fed?

Could the Supreme Court’s Tariff Decision Be Applied to the Fed?

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