KAVANAUGH: For now, you accept the constitutionality of the Fed’s removal for cause provision, which is what protects the Fed’s independence. What do you think the purpose of this independence is?
Sauer: It protects the governor. It accurately reflects the plain text of the statute and protects the governor from being removed from office over policy disagreements or without cause.
CAVANAUGH: What’s the broader purpose?
Sauer: Maintaining the Fed’s independence.
CAVANAUGH: What’s the broader purpose?
SCHAUER: Well, there were a number of reasons that were discussed by amicus curiae that I don’t think we dispute, which is that, you know, there’s a long tradition of conducting monetary policy independent of executive influence, and we don’t deny that what Congress did in that statute was to do that. Again, we do not question the validity of for-cause deletion restrictions here.
CAVANAUGH: Why do you think independence is important?
Sauer: We do not deny the importance of this for many of the reasons that our friends have said, but we emphasize that a balance has been struck here. It’s not an ironclad “you can never be removed.” There is a reason to delete the authorization.
KAVANAUGH: But at this point, in your position, there’s no judicial review, there’s no process required, there’s no remedy available, there’s a very low threshold of cause for the president to decide alone – that would undermine, if not destroy, the independence of the Fed that we just discussed.
Sauer: We don’t agree with that, and I want to point out the point you made that this is a low ground. In a sense, this is a high bar.
That’s a very strong protection because it does protect them from the one thing that Congress is obviously most worried about, which is —
KAVANAUGH: But it would be the view of the president – a president who might have policy differences – and there would be no judicial review, and the president would be able to define it for himself.
Sauer: One of the strongest traditions in this Court’s jurisprudence is the presumption of regularity in presidential conduct, which I think has been valid for 112 years and will continue to be so.
CAVANAUGH: Let’s talk about the real-world downstream effects of this. Because if this serves as a precedent, in my opinion, as long as you consider the bigger picture, there will be retribution. All appointees of the current president may be removed from office for cause on January 20, 2029 (if there is a Democratic president) or January 20, 2033. Then we can really remove ourselves from office at will. So what are we doing here? What is – you know, let’s start with – that’s why I start with the purpose of independence and clearing with a cause. If we accept all of this – no process, no judicial review, no remedies – you know, I think that’s what’s going to happen. So where are we? So, do you question that this is the effect in the real world?
Sauer: I can’t predict what a future president might or might not do, but this argument strikes me as a policy argument.
CAVANAUGH: Well, history is a good guide. Once these tools are released, both sides use them, often more the second time around. I think that’s what we have to make sure – again, that doesn’t necessarily drive decisions. We must understand what we are doing and the impact of your position on the structure of government.