WASHINGTON — President Donald Trump is initiating a significant shift by placing independent federal regulators, including the Securities and Exchange Commission, the Federal Trade Commission, and the Federal Communications Commission, under more direct White House control.
On Tuesday, Trump signed an executive order that enhances the president’s authority to influence aspects of financial oversight and establish guidelines concerning transportation safety, fundamental consumer protections, as well as wireless, broadcast, satellite, and broadband communications.
This action is part of a wider strategy by the Trump administration to exercise increased supremacy over the government, potentially restricting how congressionally allocated funds are utilized, which could lead to legal disputes and judicial involvement.
Previous administrations viewed the presence of independent regulators as beneficial for serving the long-term interests of the nation without constant political interference. Presidents typically maintained an informal influence by appointing agency leaders rather than mandating that these agencies submit their plans to the White House, which would risk their financial backing as outlined in the new order.
However, the Trump administration argues that allowing independent regulators to act autonomously could hinder presidential initiatives and not reflect public preferences expressed through elections.
“In order for the Federal Government to be genuinely accountable to the American populace, those with significant executive power must be overseen and directed by the President elected by the people,” the executive order states.
Critics of the order suggest it could lead to government abuses under the Trump administration. “This move will merely politicize and undermine independent agencies, subjecting them to the whims of current political leaders,” asserted Alexandra Reeve Givens, CEO of the Center for Democracy & Technology. She emphasized that these agencies have been maintained as independent for over a century, allowing experts to interpret laws and conduct investigations without political bias.
The concept of independent agencies dates back to 1887 with the establishment of the Independent Commerce Commission, which originally addressed railroad monopolies and pricing. Numerous other regulators have since been developed, functioning through presidential nominations and congressional scrutiny.
Roger Nober, a George Washington University professor and director of the GW Regulatory Studies Center, characterized the order as “quite significant.” This directive goes beyond current requirements that regulations with a major economic impact must be scrutinized by the White House Office of Management and Budget (OMB).
“The aim here seems to be to notably diminish the autonomy of independent regulatory agencies,” Nober stated, noting his previous role as chair of the U.S. Surface Transportation Board during Bush’s presidency. He acknowledged the rationale behind Trump’s desire to exert more control over entities like the SEC but raised concerns about whether this method genuinely enhances the accountability of independent agencies.
While the executive order encompasses regulatory activities of the Federal Reserve, it will notably preserve the Fed’s autonomy in determining short-term interest rates that are instrumental in influencing inflation and employment rates.
A spokesperson for the Fed opted not to comment on the executive order.
In the short term, the order may have limited practical implications. Michael Barr, the Fed’s vice chair for supervision and a Biden appointee, announced last month his intention to relinquish his position on February 28. The Fed also indicated a temporary halt on significant rulemaking until Barr’s replacement is appointed.
According to Ian Katz, an analyst at Capital Alpha, a court challenge could be one of the strategic intentions behind the order. “There is an expectation, and even a desire, from the White House and conservatives for legal challenges to this executive order,” Katz noted in an email, suggesting they would welcome a Supreme Court decision that reinforces executive authority over regulatory agencies.
Under the provisions of the order, the White House Office of Management and Budget will establish performance standards and management goals for leaders of independent agencies. The OMB could also modify the funding allocated to these agencies based on “activity, function, project, or object” that may contradict presidential objectives.
Moreover, the heads of independent agencies will be required to engage with special White House liaisons to maintain coordination with presidential staff and advisers.
