President Donald Trump has signed an executive order granting the White House unprecedented control over independent regulatory agencies established by the U.S. Congress. This move, which accelerates the administration's efforts to centralize executive power, has significant implications for government structure and the autonomy of these entities.
Under the new order, regulatory bodies such as the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), the Federal Communications Commission (FCC), and the National Labor Relations Board (NLRB), among others, are now required to report directly to the White House. This represents a seismic shift in their operations, since these agencies were originally designed to operate independently from the executive branch, regulating key sectors of the economy and government as noted by various American media outlets.
Going forward, these agencies will need to submit their regulatory projects to the White House for review and approval, giving the president the power to block initiatives that do not align with his priorities. Furthermore, the order specifies that legal interpretations made by the president and the Department of Justice will be binding for all agencies.
The order also empowers the Office of Management and Budget (OMB), currently led by Russell T. Vought, to withhold funds from any project or initiative at odds with Trump's policies. In 2023, Vought stated that the goal of his proposals for a future Republican government would be to "identify the pockets of independence and seize them."
Rationale Behind the Executive Order
The White House justifies the executive order by claiming it aims to ensure all federal agencies are accountable to the American people. According to the document, "Article II of the U.S. Constitution vests the entire executive power in the president, meaning all executive branch officials and employees are subject to his supervision."
Among the agencies affected is the Federal Reserve (Fed), whose independence has been a cornerstone of U.S. monetary policy. Although the order does not affect its decision-making on interest rates, it does give the president oversight over other functions, such as regulating Wall Street and financial institutions. Trump has previously expressed frustration over his inability to influence the Fed's monetary policy directly.
Historical Context and Opposition
This is not the first attempt by Trump to implement a similar reform. During his first term, a similar order was drafted by his team but was never signed due to concerns from his advisors about its legality and potential negative impact on financial markets. Nevertheless, Trump has consistently advocated for expanding presidential power. In 2017, when he attempted to dismiss special counsel Robert S. Mueller, he claimed that Article II of the Constitution gave him "the right to do whatever I want as president."
Constitutional law experts have warned that Trump's order is a direct attack on the government structure designed by Congress. The order has also raised alarms among economists and politicians who see it as an attempt to undermine the separation of powers. The swift removal of independent agency leaders following the decree has intensified these concerns. According to some analysts cited by The New York Times, this move could lead to judicial conflict if Congress or affected agencies choose to challenge the order in court.
Implications of Trump's Executive Order
What agencies are affected by Trump's new executive order?
Agencies like the SEC, FTC, FCC, and NLRB are directly affected by the executive order, as they are now required to report directly to the White House.
How does the executive order impact the Federal Reserve?
While the Federal Reserve's ability to make decisions on interest rates remains unchanged, the president now has oversight over other functions such as regulating Wall Street and financial institutions.
What are the potential consequences of this order?
The order could lead to a judicial conflict if Congress or affected agencies challenge it in court. It also raises concerns about undermining the separation of powers and the independence of regulatory agencies.