The Supreme Court is about to decide one of the biggest economic policy cases ever

A long-simmering showdown over whether President Donald Trump may seize control over the Federal Reserve appears to be entering its endgame. It is highly likely that the Supreme Court will weigh in on this dispute either Monday evening or Tuesday. 

If the Court does side with Trump, that would be one of the most consequential economic policy decisions in the federal judiciary’s history. And it could potentially have disastrous consequences both for investors and for the US economy broadly.

The Fed is one of several federal agencies that are labeled as “independent” from the president. Though the president chooses who will serve on the Fed’s Board of Governors, these governors must be confirmed by the Senate, and they serve 14-year terms. By law, the president may only remove a member of the Fed’s board “for cause,” unlike most agency leaders who serve at the pleasure of the president.

The Supreme Court’s Republican majority, however, subscribes to a theory known as the “unitary executive,” which claims that it is unconstitutional for Congress to shield agency leaders from presidential control. If you care about the details of this theory, I’ve written more explainers on it than I can count, but the gist of it is that the Constitution places all “executive” power in the hands of the president. So any agency leader who wields authority that the Court deems to be “executive” in nature must be fireable at will by the president.

For most of the past two decades, the Republican justices have slowly expanded the president’s power to fire officials under this theory. And they kicked this process into overdrive shortly after Trump took office for his second term. But, in a May decision, the Court did signal that it was spooked about giving Trump the authority to fire members of the Federal Reserve.

Although the Court’s May decision in Trump v. Wilcox was cryptic, it’s not hard to suss out why some of the justices feel torn between their loyalty to both Trump and the unitary executive theory on the one hand, and a desire to preserve Fed independence on the other.

The Fed essentially has the power to inject cocaine into the US economy. When the Fed lowers interest rates, it makes it easier for businesses to borrow money that they can use to begin new projects and hire new workers. But it also risks spiking inflation rates. Thus, if the president controls the Fed, he can engineer a short-term, politically advantageous boost to the economy — but at the cost of much greater economic turmoil down the road.

Nor is this concern merely hypothetical. In advance of his reelection bid in 1972, President Richard Nixon successfully pressured Fed chair Arthur Burns to lower interest rates. The economy boomed that year as a result, and Nixon won in an historic landslide. But Burns’s capitulation is often blamed for years of “stagflation,” slow economic growth and high inflation, during the 1970s.

In any event, a lawsuit known as Cook v. Trump is now barreling toward the Supreme Court, and is likely to land on the justices’ doorstep as soon as Monday night. Trump has asked the courts to weigh in on this case on an exceedingly expedited basis, in the hopes that he can gain the power to fire Federal Reserve governors in advance of an important Fed meeting that begins Tuesday.

As of this writing, Cook is pending before a federal appeals court. Trump asked that court to issue its decision “by the close of business on Monday, September 15, 2025.” If the appeals court does not comply, however, Trump will almost certainly attempt to bypass it and seek review from the Supreme Court in advance of the Tuesday Fed meeting.

So we are likely to find out very soon if the Court’s Republican majority intends to place the Fed under Trump’s control.

What is Cook v. Trump about?

Last month, Trump attempted to fire Lisa Cook, a member of the Fed’s Board of Governors who was appointed by President Joe Biden in 2022. 

Trump claims he fired her because she allegedly committed mortgage fraud by claiming two separate properties as her principal residence — and thus he is firing her “for cause” — but this claim is an obvious pretext. Trump has raised similar allegations against several of his political foes, including Sen. Adam Schiff (D-CA) and Democratic New York Attorney General Letitia James. And, in any event, the allegation against Cook was later revealed to be false.

Last week, Reuters reported that Cook declared one of the two properties as a “vacation home,” so the lender that helped her purchase that property was aware it was not her principal residence.

Nevertheless, Trump claims that he is allowed to fire Cook anyway. In briefs filed in a federal appeals court, Trump’s lawyers argue that the president’s false determination that Cook committed mortgage fraud “is not subject to judicial second-guessing,” and thus no court can prevent Trump from firing her based even on a transparently made-up pretext.

Under Trump’s legal theory, he could have justified firing Cook “for cause” by accusing her of being responsible for the 1881 assassination of President James Garfield, or for causing the fall of Rome. Trump is asking the Court to neutralize the law protecting Fed governors from political firings in its entirety.

What stands in Trump’s way is the Court’s decision last May in Wilcox, which indicated that the Fed is exempt from the unitary executive theory, and that Trump may not fire its leaders at will.

Admittedly, the opinion in Wilcox was gobbledygook. It claimed that the Fed is special because it “is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States” — whatever that means. Numerous legal experts, including the Republican chief judge of the United States Court of Appeals for the Sixth Circuit, have questioned whether there is actually a principled way to distinguish the Fed from other independent agencies.

Ultimately, however, the question of whether the Court’s decision in Wilcox rests on a principled distinction is academic. This Court frequently hands down bizarre or incomprehensible decisions, and those decisions are no less binding than cases that rest on sound legal reasoning. 

The important thing is that, just four months ago, this Court handed down a decision indicating that Trump cannot fire members of the Federal Reserve’s Board of Governors. If the Republican justices reverse course after such a recent decision, either by overruling Wilcox explicitly or by defining the term “for cause” so narrowly that it becomes meaningless, that wouldn’t just have stunning implications for the US economy.

It would also be an unusually loud signal that this Court has decided to become a wholly owned subsidiary of the Trump Organization.