Experts warn that presidential control over agency independence may have negative impacts on the U.S. economy.
The second Trump Administration has taken steps to expand presidential control over administrative agencies, including those traditionally insulated from White House influence.
With agencies once designed to operate independently now under close presidential control, how might this historic shift affect the broader economy?
That is the question that former U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler and law professor Lev Menand take up in a recent book chapter. They argue that greater presidential control over agencies could harm the economy in several ways. It may increase legal instability, favor special interests, weaken the rule of law, and heighten the risk of agency errors—all of which will threaten the United States’ economic health.
Gensler and Menand argue that the U.S. Congress originally designed independent agencies to answer to all three branches of government—not just the President. Although the President appoints these agency leaders, they often serve fixed terms and can be removed only for specified reasons. These leaders also possess the independent authority to issue regulations and interpret their authorizing statutes, subject to congressional oversight and judicial review. Gensler and Menard suggest that this “semi-autonomous” structure, which varies across independent agencies, is meant to shield independent agencies from political pressure, favoritism, and undue influence from special interests.
Gensler and Menand argue that the second Trump Administration has disrupted this balance. Through several executive orders, President Trump has repealed existing rules without congressionally required public input, declared that presidential interpretation of the law binds all agency employees, and required independent agencies to consult with the White House when issuing new regulations. The Administration has also asserted the power to remove agency officials and fire career employees at will, disregarding long-established legal limits.
One economic risk of this increased presidential supremacy is greater legal instability caused by more frequent policy shifts, Gensler and Menand argue. They acknowledge that elections have consequences and that some policy shifts are normal. But Congress intentionally designed independent agencies—with fixed terms, staggered commissions, and bipartisan requirements—to ensure some continuity across presidential administrations. With the President now exercising more direct control, policy shifts between administrations are likely to become more dramatic, reducing legal stability and dampening economic activity, according to Gensler and Menand.
Another economic risk they point to stems from special interest group pressures. These interest groups can influence the White House through the media, campaign donations, and lobbying. Gensler and Menand note that agency independence has traditionally served as a safeguard against these “capture effects,” which can harm the broader economy.
Gensler and Menand also warn that under stronger presidential control, regulations may prioritize short-term political gains—such as boosting the economy right before an election—over promoting long-term economic stability and growth.
Increased presidential supremacy could also weaken the rule of law, which also increases economic risks, note Gensler and Menand. Greater White House involvement in agencies’ adjudicatory, enforcement, and supervisory decisions may allow private parties to influence ongoing investigations, merger approvals, new drug applications, legal interpretations, and government benefits. Because the Trump Administration has shown a willingness to bypass the U.S. Department of Justice’s Office of Legal Counsel—a traditional source of continuity in legal interpretation—Gensler and Menard suggest that this risk may be amplified.
Similarly, Gensler and Menand highlight evidence linking diminished agency autonomy to greater political favoritism and enforcement disparities favoring well-resourced defendants, which weakens the rule of law.
Finally, Gensler and Menand argue that presidential supremacy may heighten policy and adjudicative errors and delays that pose economic risks. Congress designed agencies to rely on expert staffers with firsthand knowledge of the facts. For example, Congress separated the SEC from the Federal Trade Commission to ensure policy created by experts. By reducing agency autonomy and replacing career employees with less-experienced White House staff, the Administration risks diminishing agency expertise, increasing the likelihood of errors and delays, according to Gensler and Menand.
Although some scholars suggest that stronger presidential oversight could improve accountability and coordination among agencies, Gensler and Menand argue that it may have harmful effects that extend beyond the economic risks. Greater presidential supremacy can blur lines of responsibility and decrease accountability, increase errors by bypassing congressionally mandated procedures, and encourage policies driven more by the President’s personal interests than by coordination concerns.
“While it is not perfect, our system of semi-autonomous regulators has proven quite effective in adapting and contributing to U.S. economic growth for nearly a century,” Gensler and Menand conclude. They warn that the economic risks stemming from greater legal instability, favoritism toward special interests, weakening of the rule of law, and heightened risk of agency errors could harm the economy in the short term as well as the long term. Additional effects, they note, may emerge over time—as expert officials leave the public service and as confidence in the consistent application of the law declines.
