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America’s Supreme Court is inclined to clamp down on regulators

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A PAIR OF spirited Supreme Court hearings on January 17th confronted a question at the heart of American democracy: what is the balance of power among the three branches of the federal government? The justices seemed inclined to shift that balance towards their own chambers.

The cases under review both involve fishermen objecting to a regulation requiring them to pay hefty fees for monitors who keep an eye on them as they troll for herring. The rule was issued in 2020 by the National Marine Fisheries Service, an agency of the executive branch. It was then blessed by two circuit courts of appeal as consonant with the Magnuson-Stevens Fishery Conservation and Management Act, a law passed by Congress in 1976.

Yet in siding with the agency, those courts relied on a 40-year-old Supreme Court precedent, Chevron USA v Natural Resources Defence Council, that some current justices have soured on. According to Chevron, when a law of Congress is ambiguous, agencies have free rein to regulate in line with their understanding of the statute, as long as their interpretations are reasonable. This has come to be known as “Chevron deference”. With this week’s cases, Loper Bright Enterprises v Raimondo and Relentless v Department of Commerce, the apex of America’s judiciary looks ready to rescind this elbow-room for its co-equal branch. It seems judges may soon have more control over regulators handling everything from aviation to consumer safety.

Chevron’s most vocal critic on the court, Justice Neil Gorsuch, stayed true to his cause in the three and a half hours of arguments. Judges “abdicate” their “responsibility” as the final interpreters of the law, he said, when they allow agencies to run amok by making onerous rules like the one for herring fishermen. He suggested that another case, Skidmore v Swift (decided 40 years before Chevron), strikes a more suitable compromise. “Skidmore deference”, Justice Gorsuch said, involves “listen[ing] carefully to both sides and provid[ing] special weight” to what the agencies have to say in favour of their view, but never outsourcing legal questions to bureaucrats.

Justice Brett Kavanaugh spoke sceptically of Chevron, too, but said “deference” mischaracterises Skidmore. The 1944 case is about “respect” for regulators, he said, rather than giving them a long leash. For Justice Elena Kagan, one of only three jurists who resisted Chevron’s demise, Skidmore says “nothing”. The purported Chevron alternative, she quipped, amounts to: “if we think you’re right, we’ll tell you you’re right.”

Justice Kagan posed a number of hypothetical questions to Roman Martinez, one of the fisheries’ lawyers, involving the relative expertise of judges and agencies. Should judges decide whether a new product to promote healthy cholesterol is a “dietary supplement” or a “drug” subject to more stringent regulation? “I would rather have people at HHS [the Department of Health and Human Services] telling me,” she offered. If Congress were to legislate on artificial intelligence, she mused, should America entrust courts or experts to resolve ambiguities?

Justice Ketanji Brown Jackson chimed in with big-picture questions during the Relentless hearing. (She was recused from Loper Bright due to her participation in the case as a circuit-court judge.) Chevron opponents may think judges can keep their own preferences at bay, but “it’s actually not as easy as it seems” to pry apart law and policy, she said. Empowering judges to encroach on the business of agencies, she warned, might turn courts into “über-legislators”.

Elizabeth Prelogar, the solicitor-general, argued doggedly in favour of agency leeway through both hearings. In a nod to Chief Justice John Roberts, she warned that ditching Chevron would cause a “shock to the legal system”—reminiscent of the words he used in 2022 in lamenting his five conservative colleagues’ decision to overrule Roe v Wade, the ruling that in 1973 declared abortion a constitutional right. And in her final few minutes, with prompting from Justice Kagan and in light of an apparent lack of a majority on her side, she proposed a few ways the conservative court might tighten judicial oversight without tossing Chevron overboard. It would be a surprise if the conservative justices take the bait. 

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Economics

Donald Trump has many ways to hurt Elon Musk

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THERE WAS a time, not long ago, when an important skill for journalists was translating the code in which powerful people spoke about each other. Carefully prepared speeches and other public remarks would be dissected for hints about the arguments happening in private. Among Donald Trump’s many achievements is upending this system. In his administration people seem to say exactly what they think at any given moment. Wild threats are made—to end habeas corpus; to take Greenland by force—without any follow-through. Journalists must now try to guess what is real and what is for show.

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Economics

Donald Trump has many ways to hurt Elon Musk

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THERE WAS a time, not long ago, when an important skill for journalists was translating the code in which powerful people spoke about each other. Carefully prepared speeches and other public remarks would be dissected for hints about the arguments happening in private. Among Donald Trump’s many achievements is upending this system. In his administration people seem to say exactly what they think at any given moment. Wild threats are made—to end habeas corpus; to take Greenland by force—without any follow-through. Journalists must now try to guess what is real and what is for show.

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Economics

Jobs report May 2025:

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U.S. payrolls increased 139,000 in May, more than expected; unemployment at 4.2%

Hiring decreased just slightly in May even as consumers and companies braced against tariffs and a potentially slowing economy, the Bureau of Labor Statistics reported Friday.

Nonfarm payrolls rose 139,000 for the month, above the muted Dow Jones estimate for 125,000 and a bit below the downwardly revised 147,000 that the U.S. economy added in April.

The unemployment rate held steady at 4.2%. A more encompassing measure that includes discouraged workers and the underemployed also was unchanged, holding at 7.8%.

Worker pay grew more than expected, with average hourly earnings up 0.4% during the month and 3.9% from a year ago, compared with respective forecasts for 0.3% and 3.7%.

“Stronger than expected jobs growth and stable unemployment underlines the resilience of the US labor market in the face of recent shocks,” said Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management.

Nearly half the job growth came from health care, which added 62,000, even higher than its average gain of 44,000 over the past year. Leisure and hospitality contributed 48,000 while social assistance added 16,000.

On the downside, government lost 22,000 jobs as efforts to cull the federal workforce by President Donald Trump and the Elon Musk-led Department of Government Efficiency began to show an impact.

Stock market futures jumped higher after the release as did Treasury yields.

Though the May numbers were better than expected, there were some underlying trouble spots.

The April count was revised lower by 30,000, while March’s total came down by 65,000 to 120,000.

There also were disparities between the establishment survey, which is used to generate the headline payrolls gain, and the household survey, which is used for the unemployment rate. The latter count, generally more volatile than the establishment survey, showed a decrease of 696,000 workers. Full-time workers declined by 623,000, while part-timers rose by 33,000.

“The May jobs report still has everyone waiting for the other shoe to drop,” said Daniel Zhao, lead economist at job rating site Glassdoor. “This report shows the job market standing tall, but as economic headwinds stack up cumulatively, it’s only a matter of time before the job market starts straining against those headwinds.”

The report comes against a teetering economic background, complicated by Trump’s tariffs and an ever-changing variable of how far he will go to try to level the global playing field for American goods.

Most indicators show that the economy is still a good distance from recession. But sentiment surveys indicate high degrees of anxiety from both consumers and business leaders as they brace for the ultimate impact of how much tariffs will slow business activity and increase inflation.

For their part, Federal Reserve officials are viewing the current landscape with caution.

The central bank holds its next policy meeting in less than two weeks, with markets largely expecting the Fed to stay on hold regarding interest rates. In recent speeches, policymakers have indicated greater concern with the potential for tariff-induced inflation.

“With the Fed laser-focused on managing the risks to the inflation side of its mandate, today’s stronger than expected jobs report will do little to alter its patient approach,” said Rosner, the Goldman Sachs strategist.

Friday also marks the final day before Fed officials head into their quiet period before the meeting, when they do not issue policy remarks.

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