Six Supreme Court Justices decided to virtually eliminate the capacity of government regulatory agencies to act independently of whoever sits in the White House. By invalidating the “for cause” removal protections of their commissioners and board members, the Trump v. Slaughter decision means that now the president can, whenever he wants, fire the top federal regulators who don’t do his bidding.
This end of June decision stems from President Trump’s firing of Rebecca Slaughter, a Democratic commissioner of the Federal Trade Commission, without reason. The Court went far beyond allowing that firing to go through; it ruled that Congress had violated the Constitution in 1914 when it limited the president’s ability to fire FTC leaders.
The Court also overruled a previous Supreme Court ruling on this same issue — a case called Humphrey’s Executor in 1935. In essence, the conservative-dominated Court is proclaiming there is no such thing as an “independent” agency; they are all subordinates to the president and “the President may remove his subordinates at will.”
Capitalists wants to roll back the New Deal
The stakes for the working class in this ruling go way beyond the job protections of the individual high-paid agency executives and commissioners who will be fired more easily. The ruling paves the way for a whole new level of direct corruption in Washington, the further erosion of safety standards, assaults on union rights, and the deregulation of Wall Street and Corporate America as a whole.
It is part and parcel of “Project 2025,” the overall vision of the far-right section of the ruling class to eliminate the liberal reforms of the progressive, New Deal and Civil Rights eras and reinstall a form of governance of unregulated and unrestrained corporate power. A core feature of that vision is unrestrained presidential power.
The ruling will accelerate the post-2020 redistribution of wealth from workers to billionaires in a range of new ways. Because almost every multi-billion dollar project requires government approval at some level, it will create limitless opportunities for the president and his staff and family members to cash in directly — as they already have been under both the Biden and Trump administrations.
The agencies now functionally put under the direct control of the president are not all household names, but their decisions have a huge impact on the entire population. Those agencies include the main regulators of financial markets, including the Federal Trade Commission, the Security and Exchange Commission, the Commodities Futures Trading Commission, and the Public Company Accounting Oversight Board.
Together, these agencies are responsible for stopping insider trading, Ponzi schemes, market manipulation, abusive trade practices, excessive speculation in basic committees, while monitoring financial disclosures, stocks, bonds, derivatives, the authenticity of audits, and compliance with a whole range of financial rules. Almost all of those rules — however insufficient — were developed as a consequence of previous financial crises and corruption scandals, as a way to guard against their recurrence.
A compliant SEC chair could, for instance, selectively enforce insider trading rules, allow politically connected companies to obscure financial disclosures, or greenlight new financial products that benefit administration donors at the risk of millions of people’s retirement savings. Whether in a pension or a 401(k), most working people’s retirement savings are invested in the stock market.
With regards to free speech and the media, the Federal Communications Commission could now be ordered, at the risk of their job, to eliminate the broadcast licenses of outlets that the president disapproves of.
Or, consider the Federal Energy Regulatory Commission and Nuclear Regulatory Commission, which control pipeline approvals, electricity transmission rates, natural gas exports, licenses for nuclear reactors and regulation of nuclear waste. Their decisions, although largely invisible to the public, steer the investment of hundreds of billions of dollars, while impacting the safety, water and land of the whole country. Their leaders too are now at-will employees of the President.
The National Transportation Safety Board investigates railway accidents, such as the one that devastated East Palestine, Ohio, a few years ago. The federal response was already criminal, but now just a phone call to the Oval Office from the rail tycoons — all of which are ingratiated with Wall Street hedge funds — could make such problems disappear.
Capitalist reforms can always be reversed
In 2008, as part of the response to the Great Recession, the Consumer Financial Protection Bureau was created by the Obama administration. The purpose of the Bureau has been to limit some of the most egregious forms of greed and exploitation in capitalism. Since the CFPB’s founding, it has returned over $21 billion dollars to consumers hit by financial fraud.
Emboldened by Slaughter, the President can fire CFPB directors of this independent agency at will until he gets someone who will do his bidding. Doing the bidding of billionaire presidents could look like ignoring obvious crypto scams, letting buy-now-pay-later systems send workers deeper into debt, and failing to do anything about the massive student-loan debt crisis. Bit-by-bit, what workers have done to try to regulate capitalism and make their lives marginally easier is being negated.
The most immediate impact for workers will likely be felt with the National Labor Relations Board and the Equal Employment Opportunity Commission. Since the 1935 passage of the National Labor Relations Act, rules for organizing unions have been set by an independent regulatory agency, the National Labor Relations Board. The NLRB also polices when employers violate those rules. While the workers’ struggle is the most important determinant, and the NLRB is not a final fix, the agency has held back some of the worst forms of strikebreaking and allowed workers to successfully organize in conditions where they might otherwise have failed.
The five Board members serve five-year terms, staggered so that no single president could immediately install a majority. Combined with for-cause removal protection, a new president had to wait for vacancies to arise before shifting the board’s ideological balance. Now an anti-labor president can immediately gut the NLRB on their first day of office without reason — which means all the pending cases before the Board can immediately flip in the other direction.
Why would an employer respect a union election, stop committing an Unfair Labor Practice, or come to a settlement with their workers, if all they have to do is wait for Inauguration Day to get a new Board to rule in their favor? A hypothetical pro-labor president could now do the same thing with expanded executive authority, but since virtually all U.S. presidents have been owners, not workers, and all solicit huge corporate donations to run their campaigns, it is not hard to predict which class their NLRB appointees will favor.
The Equal Employment Opportunity Commission is the federal agency created out of the Civil Rights Act of 1964 to investigate and prosecute cases of employment discrimination on the basis of race, gender, national origin, age and disability. It has the right to investigate all companies with over 15 employees. The EEOC already has received far more claims of discrimination than it can fully investigate, so its leadership choices about which cases to pursue define what the law actually means in practice.
Already the EEOC had been hollowed out; Trump fired its Democratic-appointed commissioners too, dropped many discrimination cases, and converted the agency into an instrument to attack diversity hiring programs as “anti-white.” After the Slaughter ruling, the EEOC’s former vice chair voluntarily dropped the lawsuit challenging her termination, seeing it as hopeless.
Direct attack on the very idea of regulating capitalism
Justice Sonia Sotomayor’s dissent correctly states that without functional independence from political pressure, regulatory agencies cannot perform the core functions given to them by Congress. It’s also why Congress originally gave the leaders of the Federal Trade Commission just-cause protection from being fired, similar to the protections unionized workers have. The majority didn’t have an error of logic; it is precisely the point.
Rather than trying to understand this legal dispute on the basis of the original intent of the Constitution’s writers, or the intent of Congress back in 1914 when it founded the FTC, the real question is: what does this say about the intent of the ruling class now? The war on independent regulatory agencies can only be understood in the trajectory of U.S. capitalism and the creation of a New Gilded Age.
Independent regulatory agencies first developed as a response to the unmediated social conflict, turmoil and crisis created by the Second Industrial Revolution in the late 19th century — sometimes known as the Gilded Age. The first target were the railway companies, which developed monopoly power over other sectors of the economy, while periodically producing financial panics, environmental destruction and intense labor wars. The rail tycoons had their counterparts in all other spheres of industrialized capitalism and in finance. A broad-based, cross-class “Progressive” movement developed to rein in their power, regulate their operations and if necessary break up their enterprises.
This especially took off in the state of Wisconsin, which became a laboratory for new independent commissions and agencies to limit the power of the giant corporations, and respond to the unchecked inequality and unregulated working conditions which killed and maimed so many workers. From 1901 to 1906, Wisconsin had a progressive Republican Governor Robert LaFollete (then Senator from 1906 to 1925), who pioneered the “Wisconsin Idea,” calling upon professors and other outside experts, not politicians, to help craft legislation and staff regulatory agencies headed by experts in their fields. While a new crop of technocrats brought their specialized knowledge, it was Wisconsin’s strong labor union and socialist movement that brought the political power and pressure to make it happen. Of course, progressives like LaFollete were not socialists; they wanted not to overturn capitalism, but to regulate it, so it would be less unequal, chaotic and unstable.
In the general capitalist crisis of the Great Depression in the 1930s, the federal government under President Franklin D. Roosevelt essentially copied this “Wisconsin Idea” to create the independent regulatory agencies of the New Deal. This is where the Securities and Exchange Commission (SEC), the Federal Communications Commission (FCC), the Federal Deposit Insurance Corporation (FDIC) and the National Labor Relations Board (NLRB) come from.
Many of the labor and anti-trust laws, as well as unemployment insurance and consumer protection laws to govern the marketplace that were pioneered as part of the “Wisconsin idea” were given federal form.
The idea of independent regulation of industry did not pop out of nowhere, nor was it handed down by benevolent capitalists. It was a product of the class struggle, and in many cases these agencies institutionalized hard-fought gains of the working class, and created a new state mechanism that could be pressured to make changes.
But these agencies were never in the hands of the working class itself. They were designed to save capitalism from itself, to insulate policymaking from direct political pressure, regulate volatile industries and stave off a larger collapse. Many economic historians credit the financial regulatory apparatus of the New Deal for helping stabilize the capitalist state and financial markets during the Great Depression.
The major corporations initially hated these progressive-era agencies, and later the New Deal as a whole, as an infringement on their rights to control their property, businesses and workers. But in a time of generalized and ongoing depression, the political authority of the business elite was temporarily weakened. Over time, many titans of industry came to see the benefits of regulation – that it added stability into their otherwise ruthless competition, making it easier to predict costs, gain labor peace, and keep out new competitors.
Put the working class in the drivers seat!
As the decades wore on, these agencies became more and more captured by the industries they were designed to regulate; there was a rotating door of personnel and lawyers from the private sector to the regulators, and it became quite common for the company to write the rules that the agencies then rubber-stamped. Where direct bribery did not do the trick, a new legal form — “lobbying” — was more than sufficient. The form of direct capitalist control over all relations of production was replaced with a more masked, indirect form.
Justice Sotomayor’s dissent explains that this decision, “reshapes our [g]overnment.” That is true, but the new “shape” of the government has to be presented in class terms. The era of the capitalist ruling class accepting a level of administrative regulation for the sake of economic stability and a degree of class peace is over. Trump and a group of elite, unelected lawyers in the Supreme Court have scored a massive victory in the ultra-right program to an even more open and undisguised dictatorship of the rich — a form not seen since the Gilded Age.
But the history of independent regulatory agencies, which ends with Slaughter, shows two things. The first is that working people, when united, can make huge things happen. The late 19th Century Gilded Age produced a period of intense class battles and working-class organization, which moved all of society to consider the fundamental question of what sort of society was being built, and challenged the authority of capitalist power altogether.
The second is that the capitalist class will always work to take all reforms away, no matter how modest. They might be briefly held back or beaten, but in the long run they view every infringement on their power and wealth as sacrilege. Any time they are in crisis — and they are in crisis now due to the perceived relative decline of the U.S. Empire — a section of that capitalist class will step forward and locate the source of their problems in previous reforms.
It does not matter if the whole ruling class is pro-Trump or MAGA supporters as individuals. Many likely have unease about this Supreme Court decision, because without stable regulation all their industries could be made more challenging by ping-ponging regulatory decisions every four years. But, as with Trump’s great tax giveaways, the liberal sections of the ruling class has put up no great fight.
That is why we can’t be satisfied with a more regulated capitalism or more regulated billionaires. They have to be removed from power altogether, and the working class — not just subject-matter experts or politicians who say pro-worker things— must be put in the driver’s seat.
Photo: Sit down strike in Los Angeles in 1936. Credit: Wikimedia Commons. Worker militancy led to the government reforms now being taken away.
