Reserve

WASHINGTON  — The Supreme Court on Monday gave President Trump new power to fire the heads of most independent agencies created by Congress — but not the Federal Reserve.

Chief Justice John G. Roberts Jr. announced two opinions, one of which bolstered the president’s power as the chief executive and a second which said this authority did not extend to the Federal Reserve board.

The first was a 6-3 decision that had the support of five conservatives, while the second had a 5-4 majority that included the three liberals.

Roberts, a former White House lawyer, has long been skeptical of independent agencies whose officials may wield regulatory power in conflict with the views of the president.

Since the 1880s, however, Congress has at times created independent agencies led by a bipartisan board of experts. In 1935, a unanimous Supreme Court had upheld these multi-member boards and commissions.

But Roberts and the court overturned that precedent and declared it conflicts with the executive power of the president.

“Our Constitution creates three branches, but only one President,” he wrote. “To discharg[e] the duties of his trust, the President must have the assistance of officers he can trust. … Subordinates who exercise the President’s power are subject to removal by him. Then, and only then, can they remain accountable to the President, and the President to the people.”

The decision upholds Trump’s firing of Rebecca Slaughter, one of two Democratic appointees on the five-member Federal Trade Commission.

The Supreme Court upheld President Trump’s firing of Rebecca Slaughter, a Democratic appointee to the Federal Trade Commission.

(Graeme Sloan / Bloomberg / Getty Images)

In dissent, Justice Sonia Sotomayor said that the ruling “distorts the structure of government to fit the majority’s theory of unitary, total executive control. The result is a President who emerges with far greater power than ever before. It is a power, however, that neither the People, nor Congress, nor the Constitution bestowed upon him.”

Under what has been dubbed the “unitary executive” theory, the court’s conservatives believe the president’s executive power in Article II of the Constitution overrides Congress’power in Article I to write the laws and structure the government.

The departments and agencies of the federal government exist only because Congress created them by law.

But in the second opinion, the court blocked Trump’s bid to fire Fed Governor Lisa Cook, an appointee of President Biden.

Roberts said the central bank dates back to the nation’s founding, and Congress created the Federal Reserve Board in line with “our Nation’s tradition of central banking protected from political interference.”

Trump tried to fire Lisa Cook in a social media post, he said.

But “the Federal Reserve’s Governors do not serve at the President’s pleasure — they instead serve staggered 14-year terms, and may be removed only ‘for cause’,” he wrote.

Justice Brett M. Kavanaugh cast a crucial vote to support the Fed’s independence. He said he joined the majority because it “confirms the longstanding historical practice and understanding that the Federal Reserve is an independent agency whose Governors enjoy for-cause removal protection consistent with Article II of the Constitution.”

The court did not finally decide on Cook’s case, except to say she deserved due process of law. She could not be fired without a hearing and evidence, the court said.

The setback for independent agencies came as no surprise, however.

Even prior to Trump’s election, Roberts has insisted agency officials must be accountable and under the control of the president.

Last year, the justices blocked lower court rulings that would have reinstated agency officials who were fired by Trump.

For most of American history, however, it had been understood that Congress had the power to structure the government and to create semi-independent agencies to carry out specific tasks like regulating railroad rates or the money supply.

These agencies and commissions were led by a bipartisan board of experts who were appointed with a fixed term. They could be fired only for cause, not because of a political disagreement with the president.

The Supreme Court upheld these multi-member commissions in 1935 on the grounds their work was more legislative and judicial than simply enforcing the law.

But the court’s current conservative majority has contended these commissions and boards wield executive authority and are therefore, subject to direct control by the president.

In creating such bodies, Congress often was responding to the problems of a new era.

The Interstate Commerce Commission was created in 1887 to regulate railroad rates. The FTC, the focus of the court case, was created in 1914 to investigate corporate monopolies.

The year before, the Federal Reserve Board was established to supervise banks, prevent panics and regulate the money supply.

During the Great Depression of the 1930s, Congress created the Securities and Exchange Commission to regulate the stock market and the National Labor Relations Board to resolve labor disputes.

Decades later, Congress focused on safety. The National Transportation Safety Board was created to investigate aviation accidents, and the Consumer Product Safety Commission investigates products that may pose a danger. The Nuclear Regulatory Commission protects the public from nuclear hazards.

Typically, Congress gave the appointees, a mix of Republicans and Democrats, a fixed term and said they could be removed only for “inefficiency, neglect of duty or malfeasance in office.”

Slaughter was first appointed by Trump to a Democratic seat and was reappointed by Biden in 2023 for a seven-year term.

SACRAMENTO — Gov. Gavin Newsom reached an agreement Friday with legislative leaders on a $351.7-billion state budget in his final year as governor, a spending plan that uses a tax windfall to avoid major cuts and lessen California’s chronic deficit in the years ahead.

The deal provides nearly $2 billion in state revenue next year through tax hikes on corporations, new levies on software sales and a revamped tax on managed healthcare organizations. Lawmakers and the governor continue major investments in education, healthcare and agreed to increase spending on subsidized childcare and affordable housing.

“We want to leave the next governor not only a balanced budget, but a budget that is substantially structurally sound, and we’re going to accomplish that,” Newsom said in an interview Friday. “We were very cautious in terms of new spending,”

The agreement ends weeks of lobbying by outside interests and negotiations among lawmakers and the governor at the state Capitol about how to handle a surge of income tax collected on stock market gains related to artificial intelligence.

Early forecasts last June projected a $12.6-billion deficit in 2026-27, according to the California Department of Finance. Updated predictions now suggest the state will end the year with a surplus of $4.5 billion.

Democrats, following Newsom’s lead, are tucking away $6.4 billion for future years, which allows the governor to knock down a deficit previously projected through 2027-28 and assuage criticism about his spending habits.

But economists say the fix and revenue increase is likely only temporary.

Spending in California has generally exceeded revenue growth during Newsom’s tenure in the governor’s office, creating a chronic shortfall. Despite the extra funding, the budget continues a trend of relying on reserves, shifting funds, borrowing and suspending debt payments to balance state spending.

The Legislative Analyst’s Office, the nonpartisan fiscal advisor for lawmakers, has warned of a roughly $10-billion gap between the amount of money the state brings in and spends, which could grow dramatically worse if the stock market turns downward. The LAO has said the existence of any operating deficit during a revenue boom is a red flag and that the state is “ill-prepared” for even a modest decline.

Christopher Thornberg, an economist and founder of the consulting firm Beacon Economics, said it’s business as usual in Sacramento.

“They love increasing spending. But it seems politically impossible to go the other way,” Thornberg said. “We’ve seen this play out over and over again.”

Lawmakers and the governor offered a different take and asserted that their decision to put the $6.4 billion into a short-term reserve, called the Projected Surplus Temporary Holding Account, and ask voters to allow them to store more money in the rainy day fund are examples of prudent budgeting.

“You see us save more and you see try to address the immediate needs of our community, but also the structural budget that potentially awaits us,” said Senate President Pro Tem Monique Limón (D-Goleta) in an interview. “We are forecasting a moment where we will need to address these issues and we want to start now to think about the future as well.”

Under a progressive tax structure, the state budget is dependent on income taxes paid by the ultra-rich on earnings largely from capital gains. The set up leaves California vulnerable to the unpredictable nature of the stock market, dramatic swings in revenue and, in recent years, reliant on poor projections.

Negotiations at the state Capitol included an agreement on a constitutional amendment that seeks to offset the revenue highs and lows.

If approved by voters on the statewide ballot in November, the amendment would raise a cap on mandatory deposits into the rainy day fund from 10% to 20% of general fund revenue. The measure would also allow lawmakers to exempt money they put into the rainy day fund and the temporary holding account from state spending limits.

Under an existing state appropriations restraint, also known as the Gann Limit, lawmakers cannot spend more than an amount determined by a formula that takes annual tax proceeds, changes to the population and cost of living into consideration. Tax revenue above the limit must be divided between schools and refunds to taxpayers.

With few exceptions, the limit applies to most appropriations of tax revenue, including when lawmakers put money away in the rainy day fund and other reserves.

Newsom said the change will leave the state in a much better position to weather the volatility. Though calls for tax reform remain in California, the governor said being able to place more money into the reserves could ultimately solve the state’s budget challenges.

“The one thing missing is the one thing that I think we finally landed, which is the change in the reserves,” Newsom said. “It changes the political dynamic, where now you’re not exchanging general fund priorities.”

Republicans criticized the proposed constitutional amendment, which passed in a budget trailer bill this week, for failing to require that excess revenue pays down the state’s $22 billion in unemployment insurance debt.

State Sen. Tony Strickland (R-Huntington Beach) called it a missed opportunity.

“It does not require debt payment to go to the UI debt,” Strickland said. “It facilitates more spending, exempting reserve deposits from the state spending limit.”

As part of the negotiations, lawmakers agreed to delay some healthcare cuts that would have required monthly premiums for immigrants and eliminated dental care. The deal adopts a Medi-Cal asset test of $21,000 on July 1, 2027, instead of a $2,000.

The budget agreement includes a provision requiring California’s next governor to develop options to reduce taxpayer subsidies for corporations whose employees receive state-sponsored healthcare through Medi-Cal instead of the company’s health plan. The plan is aimed at raising revenue to offset federal cuts that are expected to leave millions of Californians without access to healthcare.

The California Department of Finance said state reserves are expected to total $28.8 billion under the 2026-27 budget.

Alan Greenspan, one of the most influential economic policymakers in modern US history, has died aged 100. Greenspan led the Federal Reserve for nearly two decades under four presidents, overseeing a long period of economic growth but also faced criticism linked to the 2008 financial crisis.

We rented Il Nido because we thought other people wouldn’t like it. Small and basic, without internet, the property was supposedly beside a beautiful national park famous for its coastline and migratory birds. The online picture suggested it was pressed up against one of those concrete pillars (common around Sicily) supporting a deserted and rotting motorway flyover. I was writing a thriller with mafia connections. My partner wanted to scrape off six months of fumes from her new job in London. Our daughter needed fun.

“This is a bomb,” said the hostess, opening a cupboard under the sink. “You turn it anticlockwise to go off.”

“Not bomb, bombola,” whispered my partner. “It’s the gas canister, for the stove.”

From outside in the driving rain came the sounds of traffic and sodden animals – frogs and a goose, always in that order: frog croak, goose quack; frog croak, goose quack.

We woke up on the Saturday to the first sunshine in six months. The roar we had thought was traffic was the crash of waves. The sound of a goose eating a lot of frogs in quick succession turned out, in fact, to be the call of wild flamingos. We were, just as our hostess had promised, in a tumbledown farmstead – what Sicilians call a baglio – among the shimmering lemon groves, on the edge of the Vendicari nature reserve; and it was glorious.

A baglio is more specifically a fortified group of buildings around a central courtyard, the stone barn equivalent of “circling the wagons” in America. In the 19th century, armed gangs roamed the fields of south-east Sicily. Isolated farms were attractive targets because they stored a whole year’s crop – grain, olives, wine, tools, animals. The two barns opposite our building were caved in, the stone courtyard was more a sunken boulder. In one corner, a vast cluster of poppies and marigolds billowed in merry defiance. On top of a collapsed roof was a starling with 17 voices, including one that sounded like a falling bombola, tossed over the wall by a bandit, and another that suggested a laughing computer.

Vendicari is small, but it is one of the most important wetland nature reserves in Sicily. In the 1970s, the owners of an asphalt and petroleum company wanted to build an oil refinery here. The local officials, looking across the valley from their glorious baroque buildings in Noto, approved the plan. They hadn’t reckoned on the force of Bruno Ragonese, a local eccentric who kept 20 abandoned dogs as pets, and wasn’t even Sicilian: he was an immigrant from Libya. He strode out to the site, gathered evidence on migratory birds, built local environmental groups into a powerful alliance and, brilliantly, argued that since these birds were migrating (as he had done) from Africa to Europe, this was a much bigger issue than a wallet-stuffer for the Noto politicians – it was an international scandal.

Next came the property developers. Again, the Noto councillors patted their pockets. And again the extraordinary young man swung into action. No, replacing the drained wetlands with fake ponds did not constitute “sympathetic, environmental building”. No, migratory birds wouldn’t be perfectly happy on a smaller patch of land in a cheaper sector – they weren’t social housing tenants. Yes, this is the head of Ramsar (the organisation upholding an international environmental treaty protecting wetlands) on the phone wanting to know why you plan to destroy one of Europe’s essential marshlands.

The nature reserve was established in 1984.

For a piffling €7 a day for a whole family or €3.50 for adults, the entire park is yours. After a breakfast of fresh ricotta, honey and local oranges (all from a Coop: these shops look just as plain as the UK Co-ops, but equal the best London delicatessens for good things), we started our visit on Calamosche beach. With juniper bushes, wild irises, tumbling cacti and the lilting flight of hoopoes, it is a blissful stretch of sand sloping into gentle waves. On the left, the rocks lead up to the Grotta di Calamosche, a cave with a tree growing inside. From there, the exquisite view looks almost solid, as if sealed by light.

It is easy to walk the length of Vendicari in two hours, from the ruins of Eloro, a seventh-century BC Greek colony, past the flamingos, to the eerie modern remains of a tuna-canning factory, where the oil refinery was going to be. For hundreds of years, until 1944, tuna were caught here by a brutal method of netting and trapping called mattazana, literally “the slaughter”. Now roofless, with staring windows and only a crowd of thin pillars remaining, this Colosseum for fish feels as ancient as Rome.

“Did you know flamingos are pink because they eat shrimp?” said my daughter, interrupting my pleasantly gloomy mood thinking about time, loss and tins of fish.

I did not, and I don’t believe it. There’s only so much silliness from nature that I’m prepared to accept. “And what colour are flamingos that don’t eat shrimp?” I said, in a superior tone.

“No colour. The world is full of invisible flamingos.”

The two lakes at the heart of the reserve were thick with these fantastical birds, gabbling and scooping at the water, and coming in to land like badly piloted pink planes.

I retorted with science. “Those tiny buildings?” I pointed towards ancient Syracuse, glimmering in the distance. “Birthplace of Archimedes, one of the greatest mathematicians of all time, inventor of … No, don’t look it up on your phone – phones are banned!”

But it was too late. She had captured another flash of internet. “Hey! There’s an H&M in Syracuse. Let’s go!”

The path around the reserve does not entirely encircle it. You set off left, walk for 5 miles (8km), then half a mile before you get to your ruined farmhouse home, your way is blocked by a private lemon grove. You must not go through it. You are not allowed through it.

We went through it. It was lovely.

In this part of Sicily, lemons are so plentiful and the trees so giving, that you feel the fruit is being forced on you by nature, Breughel fashion; it would be rude not to accept. Of course, you must not add theft to trespass. But I thoroughly recommend you buy some from the farmer: they are delicious. Organic, bloated, dazzling growths of oily yellow, I think they are the famous Femminello Siracusano lemons. Because local regulations forbid the use of wax or pesticides, every part is edible.

After the lemon grove came a path of marigolds, as tall as my shoulder, and wild fennel, above my head. We arrived home at sunset, where we cooked tagliatelle al limone rubato on the bits of the stove that did work, and ate it overlooking Syracuse and its H&M, with three invisible flamingos for company. Here’s the recipe:

Pasta al limone rubato

Lardo or bacon, as much as you want
1 lemon, zest and juice
Scrubland herbs thyme, oregano or whatever you can find. Fennel is good
Pasta, perhaps tagliatelle
Parmesan cheese, lots

Fry the lardo, add the lemon zest, herbs, a little pasta cooking water, and stir. Add pasta. Mix in grated cheese and lemon juice until it tastes nice. Serve under cover of darkness.

WASHINGTON — The Senate confirmed President Trump’s nominee to lead the Federal Reserve, Kevin Warsh, bringing new leadership to the world’s most powerful central bank at a fraught moment for the global economy.

Warsh was confirmed Wednesday in a largely party-line vote. His nomination had been thrown into doubt in recent months after Republican Sen. Thom Tillis of North Carolina said he would block the nomination while the Justice Department investigated Fed Chair Jerome H. Powell. The Powell inquiry was dropped in April, clearing the way for the Senate to confirm Warsh.

Senate Majority Leader John Thune (R-S.D.) urged colleagues to support Warsh during a floor speech Wednesday morning, saying it’s crucial that a Fed chair “understand not only the macro” but also “appreciate the microeconomy: and that’s the hardworking Americans, their jobs and their livelihoods.”

“Kevin Warsh is just such a person,” Thune said.

Warsh, 56, a former top Fed official, will become chair at an unusually difficult time for the independent agency.

Inflation has topped the Fed’s 2% target for five years and is now rising faster because of surging gas prices. The Fed’s interest rate-setting committee is divided and saw the most dissenting votes in more than three decades last month. And Powell, after years of personal attacks from the Republican president and an unprecedented legal investigation by the Justice Department, plans to stay on the Fed’s board even after his term as chair ends, potentially creating a competing power center.

Trump has demanded change at the Federal Reserve

The Fed has faced numerous threats to its independence from Trump, who has repeatedly attacked Powell for not cutting interest rates. Trump also sought to fire Fed Gov. Lisa Cook and launched an investigation into brief Senate testimony by Powell on a building renovation.

Kevin Hassett, director of the White House’s National Economic Council, said in a Fox News interview on Sunday that he believes the markets are relieved that Warsh “is going to help lower interest rates over time.”

“Obviously, data driven,” said Hassett. “I’m not putting any pressure on Kevin Warsh.”

In December, Trump said on his social media platform that he wanted a Fed chair who would cut interest rates when the stock market rose — the opposite of what traditional economics would prescribe — and added, “Anyone that disagrees with me will never be the Fed chairman!”

Trump’s comments have fueled concerns over whether Warsh will set rates based on economic conditions or seek to cut rates to appease Trump, even if doing so could worsen inflation. At Warsh’s confirmation hearing last month, Sen. Elizabeth Warren, a Democrat from Massachusetts, derided him as a “sock puppet” for Trump. Warsh declined to say that Democrat Joe Biden had won the 2020 election against Trump, who has falsely claimed that voter fraud cost him reelection.

Still, Warsh denied at the hearing that Trump had pressured him to reduce the Fed’s key rate.

“The president never once asked me to commit to any particular interest rate decision, period,” Warsh said then. “Nor would I ever agree to do so if he had. … I will be an independent actor if confirmed as chair of the Federal Reserve.”

A critic of the Fed’s leadership in the past

Warsh has been highly critical of the Fed’s recent track record, particularly the inflation spike in 2021-22, the worst in four decades, and has called for “regime change.” Yet he has provided only broad outlines of what that change would involve.

He has called for limiting the Fed’s communications, which would be a sharp shift after decades of increasing transparency. He has argued that some of its communications tools, such as quarterly forecasts of where its key rate may head, have made it harder for officials to switch gears.

Senate Democrats also have condemned Warsh for not fully divulging the details of his extensive wealth, which disclosures show amounts to at least $100 million. His investments include stakes in Polymarket and SpaceX, but he hasn’t revealed how large those holdings are. He promised to sell all such assets within 90 days of being sworn in.

“He will be the wealthiest Fed chair in history, but he refuses to provide transparency to the American people about who he is entangled with,” Warren said.

Warsh faces difficult economic conditions

The Fed is still grappling with how to respond to the 50% jump in gas prices from the Iran war. The increase has boosted inflation, which reached 3.8% in April.

The Fed is tasked by Congress with keeping prices stable, which it seeks to do by raising its short-term rate to make borrowing and spending more expensive, cooling growth and inflation.

The Fed typically looks past temporary price increases that stem from supply disruptions, such as the war’s cutoff of oil through the Strait of Hormuz, because those prices typically level off — or even fall back down — once the supply is restored.

But the Fed also followed that approach after the COVID-19 pandemic snarled global supply chains for goods, lifting prices for things such as cars, furniture and electronics. Inflation turned out to last longer than expected, and Powell and other Fed officials have acknowledged they waited too long to raise rates. Inflation surged to 9.1% by June 2022.

The Fed’s rate-setting committee has kept rates unchanged for three straight meetings as it evaluates the effect of the gas price spike. At its most recent meeting last month, three members of the committee objected to language that suggested its next move would be a rate cut. They preferred more neutral language that would allow for a hike. Many Fed watchers saw those dissents as a warning shot to Warsh that he won’t be able to easily engineer rate reductions.

A fourth member of the 12-member committee, Stephen Miran, dissented in favor of a rate cut, as he has at every meeting since Trump appointed him to the Fed’s board last September. Miran is serving until a replacement is named, and Warsh will take his spot.

Powell, meanwhile, said at a news conference April 29 that he would remain as a Fed governor until the Justice Department closes its investigation into the Fed’s building project, the first time a chair may stay on the board for an extended period since 1948. His term as a governor lasts until January 2028.

U.S. Atty. Jeanine Pirro has dropped the government’s investigation, but she has said it could be reopened if the Fed’s inspector general office, which has looked into the renovation project since last July, finds evidence of criminal activity.

Rugaber and Cappelletti write for the Associated Press.

May 13 (UPI) — The U.S. Senate voted to confirm Kevin Warsh on Wednesday as the new chairman of the Federal Reserve. Warsh, who was nominated by President Donald Trump, succeeds Jerome Powell, who has been frequently criticized by the president for not lowering interest rates in accordance with Trump’s demands.

The Senate voted 54-45 to confirm Warsh in the most partisan vote for a chair nominee in history, CNN reported. Sen. John Fetterman, D-Pa., was the only Democrat to vote in favor of the confirmation.

Warsh will be the 17th chair of the central bank, which is traditionally politically independent. However, Trump has aimed a great deal of criticism at the Fed and its governors over that independence, insulting Powell harshly at times and threatening to fire him.

The president also supported a Justice Department investigation into Powell, allegedly over costs for the central bank headquarters renovation. Powell has said that Trump targeted him because of the Fed would not follow his orders on interest rates. The Justice Department dropped the investigation in late April.

Democrats have expressed concerns about Warsh’s independence from Trump if confirmed. The new Fed chair has said he will be “an independent actor” but also promised a “regime change” at the central bank, The New York Times reported.

Warsh is the wealthiest Fed chair nominee in recent history, with a net worth over $100 million. He is married to Jane Lauder, who is an heir to the Estee Lauder fortune, and also has about $192 million in assets in combination with her.

Warsh said that he would divest a large amount of his assets and resign from several positions if confirmed. He also served as a governor at the Federal Reserve from 2006 to 2011.

Powell’s term as chair ends Friday, but he has said he’ll stay as a fed governor for his remaining two years.