Kavanaugh: For present purposes, you accept the constitutionality of the removal-for-suit provision for the Federal Reserve, and that is what protects the independence of the Federal Reserve. What is, in your view, the purpose of that independence?
Sauer: It protects the governors. Reflecting exactly the plain text of the statute, it protects governors from removal for disagreement on policy or for no reason at all.
Kavanaugh: What is the broader purpose of this?
Sauer: To preserve the independence of the Federal Reserve.
Kavanaugh: And what is the broader purpose of this?
Sauer: Well, there are a number of reasons that are discussed by friends, and I think they are not disputed by us, which is that there is, you know, a long tradition that this exercise of monetary policy is exercised independent of, you know, executive influence, and we do not dispute that that is what Congress was doing in that statute. And again, we are not challenging the validity of the removal for cause restriction here.
Kavanaugh: And why is this independence important in your view?
Sauer: We do not dispute the importance of this for many of the reasons that friends say, but we emphasize that a balance has been reached here. This is not ironclad “you can never be removed.” There is authorization for the removal of the case.
Kavanaugh: But on that, in your position that there is no judicial review, no due process, no remedy available, a very low bar for a cause that the president alone determines—which undermines, if not shatters, the independence of the Federal Reserve that we just discussed.
Sauer: We disagree with that, and I point out the point you made that this is a low bar for the cause. In a sense, it is a very high bar.
It’s a very strong protection, because it protects them from the one thing that Congress seemed most worried about, which is…
Kavanaugh: But it would be in the view of the president—the president who might have a disagreement on policy—and there’s no judicial review, and the president can only define it himself.
Sauer: One of the strongest traditions in the jurisprudence of this court is the kind of presumption of regularity for the actions of the president that has applied to this provision, I think, effectively for 112 years, and continues to do so.
Kavanaugh: Let’s talk about the real-world downstream effects of this. Because if this was set as a precedent, it seems to me, just thinking big picture, what goes around comes around. All the appointees of the current president are likely to be removed for cause on January 20, 2029, if there is a Democratic president, or on January 20, 2033. And then we really remove at will. So what are we doing here? What is—you know, we started—so I started with what is the purpose of independence and removal for cause. If we accept all these—no procedure, no judicial review, no remedy—you know, that’s what will happen, I think. And so where are we? So you dispute that that’s, you know, the real world effect?
Sauer: I cannot predict what future presidents may or may not do, but the argument strikes me as a political argument.
Kavanaugh: Well, history is a pretty good guide. Once these tools are released, they are used by both sides, and usually more so the second time. And I think what we want to make sure that we—again, that can’t drive the decision necessarily. We must be aware of what we are doing and the consequences of your position for the structure of government.