Week 22: Remodeling the House

MaxOkay, okay, okay. Welcome back to the Common Thread. I'm Max, and Blake is here with me, and I have to say, this week's episode might be the most important one we've done.

BlakeNo pressure. Hey everyone, Blake here, and Max is not overselling it. The Supreme Court's term ends in June, and right now three of the biggest rulings in a generation are sitting in a queue.

MaxAnd here's the thing. Most people see these as three separate stories – birthright citizenship, presidential firing powers, transgender sports – Sports fans, but we're arguing they are one story.

BlakePlot twist, it's all about who actually holds constitutional authority in American life. All three cases are answering the same question from a different angle.

MaxSo CBS News is reporting the term wraps around the end of June, decisions coming fast.

BlakeRight, right, right. And first up, we dig into Trump versus Slaughter, which could end 90 years of independent agency protections. Since we're talking FTC, potentially the Fed, structural governance stuff that affects your wallet whether you're watching or not.

MaxSeriously, then we look at Trump versus Cook. That's the Federal Reserve case. Blake's going to make the market risk argument there, and honestly, it stopped me cold.

BlakeI mean, bond markets are pricing in zero political risk at the Fed right now. That's a bet I would not take.

MaxThen birthright citizenship, the Fourteenth Amendment, Wong Kim Ark. Barrett and Gorsuch pushing back hard at oral argument. We walk through all of it.

BlakeAnd the Transgender Sports cases argued back on January thirteenth. SCOTUSblog says the court looks likely to uphold the state bans,

MaxMm-hmm.

Blakebut the real story is the legal question underneath, and that part is not settled.

MaxAll of that plus connective tissue and a concrete action item at the close.

BlakeLet's get into it. First segment: Executive Power and the Regulatory State. Sure. OK, so get this. Before June is over, the Supreme Court is going to hand down rulings on Birthright Citizenship, who the President can fire and Transgender athletes in sports. Three cases, three completely different headlines and nobody on cable is connecting them.

MaxRight, because the press is covering each one as its own separate drama.

BlakeExactly. CBS News frames the birthright case as an immigration story. The firing cases get filed under Trump. Trump personality coverage. The sports band is culture war. But, Max, these are not three stories.

MaxThey're one story. The court is rewriting the architecture of the Constitution in a single term, all at once.

BlakeThe Fourteenth Amendment, the separation of powers, executive authority, all three on the table simultaneously-that has not happened in most of our lifetimes.

MaxI'm Max, by the way, lead host of The Common Thread, and I think about the health of this country pretty broadly.

BlakeAnd I'm Blake, spent years in investment banking watching smart people make decisions based on what everyone else believed rather than what the data showed. Old habit, trace every claim back to its actual assumption.

MaxWhich is exactly what this court is doing, by the way, tracing every assumption.

BlakeYeah, and not gently. According to CBS News and Reason, the term wraps by July 4th. Decisions are coming fast.

MaxAnd Deseret News pointed out, the court has already pushed back on Trump this term. term tariffs got struck down the Voting Rights Act got narrowed so this is not a rubber stamp operation which

BlakeNo, and here's the thing. The pattern across all three cases is the same question. Who holds definitional power in American life? Who gets to say what a citizen is? Who can be fired? What a woman's sports team is?

MaxThree answers, one June.

BlakePlot twist, they might not all go the same direction.

MaxWhich makes this more interesting not less. So here's what I want to know. What does it actually mean when a president fires someone, Congress explicitly said he couldn't, and the court looks ready to say, yeah, that's fine? Okay.

BlakeOkay, so here's the actual case: March, twenty twenty five-Trump fires Rebecca Slaughter off the FTC no cause given, she sues, and now the whole thing is sitting at the Supreme Court as Trump versus Slaughter.

MaxRight; and the FTC has been around since nineteen fourteen. For a hundred plus years commissioners could only be fired for cause, meaning actual misconduct. Inefficiency, neglect, malfeasance-not just your priorities don't match mine. nine.

BlakeThat protection comes from Humphreys Executor, nineteen thirty five case, unanimous decision; the whole premise, some agencies need insulation from day to day politics to function.

MaxThink of it like a referee-you want the ref calling the game, not looking over his shoulder at whoever hired him.

BlakeYeah, and then the ref starts checking who's watching from the owner's box.

MaxExactly; so Humphreys Executor was that protection; and an oral argument in December, according to PBS News, Roberts called it a "dried husk" of whatever people used to think it was.

BlakeGosh, I mean Roberts-that's not a subtle hint.

MaxGorsuch called it "poorly reasoned." Those two quotes alone tell you where the conservative majority is headed.

BlakeOkay, but I want to push back on something, Max. People hear this and think it's a Trump personality story. Is it?

MaxNo, and that's the thing worth saying clearly: the legal theory here is called the Unitary Executive. The argument is that all executive power flows through the President and Congress cannot create an agency head who is effectively shielded from removal.

BlakeWhich has been percolating for decades. Reagan's people argued it. Bush's people argued it. This is the moment it might actually land.

MaxRight, and according to Ward and Smith's analysis, a broad ruling could hit roughly two dozen agencies with similar protections: the NLRB, the EEOC, the Consumer Product Safety Commission, the Nuclear Regulatory Commission.

BlakeThis is where it gets good, though, because NBC News reported that Solicitor General Sauer stood up and argued Humphreys had produced a, quote, headless fourth branch of government. And honestly, that's not a crazy framing.

MaxIt is the administration's framing, but it's not a crazy one.

BlakeEasy one. Fair, fair; look, the accountability question is real; these agency heads aren't elected either; so who decided they should be untouchable?

MaxThat's the genuine tension. The counter argument from the liberal justices per PBS is that without those protections a president could fire all the scientists and economists and replace them with loyalists.

BlakeYeah, yeah, and neither of those outcomes sounds great, honestly.

MaxTwo things can be true: You can think the unitary executive theory has some has some constitutional merit, and also worry about what a fully politicized regulatory state looks like in practice.

BlakeAnd then, get this, the Slaughter ruling might not be the end of the story, because the same firing logic gets pointed at an institution.

Maxthat makes every American's mortgage more expensive or cheaper. Speaking of that uncertainty, the Fed case is the one markets haven't priced in yet.

BlakeSure, sure.

MaxSo the same firing logic that hits Slaughter has a second target—Governor Lisa Cook. Trump fired her in August twenty twenty five, alleging mortgage fraud from before she ever joined the Fed.

BlakeAnd she's still at her desk?

MaxShe is. Courts blocked the removal at every level. Then the Supreme Court took the case "Trump v. Cook." Oral arguments in January—and here's where it gets good.

BlakeThe justices who seemed ready to gut Humphreys Executor in Slaughter. Suddenly got cold feet on the Fed.

MaxKavanaugh, Trump's own appointee, he said, and I'm paraphrasing, that the administration's position would weaken if not shatter the independence of the Federal Reserve.

BlakeWait, that's Kavanaugh?

MaxKavanaugh and CBS News reported the Court had already flagged the Fed as a uniquely structured quasi private entity tracing back to the First and Second Banks of the United States. That's not nothing.

BlakeOkay, so I want to push on this because I'm not sure the carve out holds logically. An unelected board sets the price of money for the entire country. Why should that be less accountable to the President than, say, the FTC?

MaxThat's the honest tension. And look, I'm not going to pretend the Constitution The constitutional argument one way is

BlakeHmm.

Maxobvious.

BlakeRight; a president accountable to voters having some check over monetary policy is not obviously wrong.

MaxBut here's what the press is completely missing: the market angle.

BlakeTell me.

MaxLean in. Markets don't price political risk at the Fed right now, not in bond yields, not in inflation expectations. Zero. If a president can fire a governor over policy disagreements dressed up as misconduct

Speaker 3...

Maxmisconduct, every rate decision becomes a negotiation with the White House. So the cost isn't abstract; it's higher borrowing rates, it's inflation risk. Jamie Dimon reportedly warned interference with the Fed would have reverse consequences, raising inflation and borrowing costs over time.

BlakeSo the court could rule narrowly for Trump on Slaughter, carve out the Fed and Cook, and everyone cheers, but that uncertainty just hangs over monetary policy heading into the midterms. The midterms

Max-months of ambiguity priced into nothing-that's the risk nobody's writing about.

BlakeA one hundred and thirteen year track record of presidents never trying this, and now we've burned through that precedent in one summer.

MaxThe first time in the Fed's one hundred thirteen year history a president attempted to fire a governor-and we're not treating it like the financial story it is.

BlakeNow flip that on its head, the same question: About who has definitional authority shows up in the next case, and it's not about rates, it's about who counts as a citizen.

MaxTrump versus Barber. Birthright citizenship and the 14th Amendment is about to get a workout.

BlakeShifting gears here, we've been talking about who gets to fire people. Now let's talk about who gets to belong.

MaxAnd this is where it gets good because this is the same question, Max: Who holds definitional power? The Slaughter Case asks who defines the workforce of the regulatory state? Trump v. Cook asks who defines independence at the Fed? And Trump v. Barber asks who defines citizenship itself?

BlakeThe word that's on the table is jurisdiction. The Fourteenth Amendment says all persons born or naturalized in the United States are citizens of the United States. States and subject to the jurisdiction thereof, are citizens." That phrase has meant the same thing for a century.

MaxAnd the Administration's plays to slip a different word in there.

BlakeRight: according to SCOTUSblog's analysis, Solicitor General Sauer's whole legal theory rests on the word "domicile," permanent legal residence. The problem: that word is not in the amendment.

MaxNot implied, not suggested, not there at all. So Sauer's arguing that subject to the jurisdiction thereof means your parents had domicile here, and the justices, including Trump's own appointees, were not having it.

BlakeGorsuch pointed out that domicile doesn't appear in the congressional debates over the Fourteenth Amendment. Barrett zeroed in on the enslaved people problem: people brought here through the slave trade had no intent to stay. Under the administration's logic, their children may not have qualified as citizens.

MaxCitizens, wait, wait, wait! that's the argument Sauer walked into-that the Amendment written to guarantee citizenship to freed slaves might not have actually covered freed slaves?

BlakeAccording to reporting from SCOTUSblog on Barrett's questioning, yeah, that's the corner the argument backed into. And there's an eighteen ninety eight President sitting right on top of this-Wong Kim Ark, huge! The Court held that a child born on U.S. soil to Chinese parents

Speaker 3is a U.S. citizen.

BlakeChinese parents who could not naturalize was still a citizen. The Library of Congress notes both sides actually agree that Wong Kim Ark controls the case; the difference is what they think it means.

MaxThe Administration wanted the Court to read Wong Kim Ark narrowly, as only applying to parents with permanent domicile; but those parents had been living in San Francisco for twenty years.

BlakeRight; and Kavanaugh flagged that Congress re-enacted the exact

Speaker 3language of the Citizenship Clause.

Blakeexact same birthright citizenship language in nineteen forty and again in nineteen fifty two after Wong Kim Ark. If Congress wanted a different rule they had two shots to write one.

MaxNow look, the oral argument went badly for the administration. Most court watchers, including analysis at SCOTUSblog, read the pressure data as pointing toward a 6-3 or 7-2 loss for the government. But here's what I want to push on. That doesn't close the conversation.

BlakeNo, it doesn't. There are about one hundred and fifty thousand babies born each year who'd be affected under the executive order if it took effect, according to Wikipedia's reporting on the case. But even a loss for the administration doesn't mean Congress can't legislate on citizenship rules. The court can rule narrowly on the statute and not touch the constitutional question.

MaxWhich means this fight moves to Congress. Chief Justice Roberts actually toed Sauer during argument: "It's a new world. It's the same Constitution." That's a pretty clear signal.

BlakeAnd that signal matters, because the question isn't just legal, it's definitional: Who belongs here? Which branch answers that? The thread from Slaughter to the Fed to this case is the exact same: definitive power, and the next case takes that same question and drops it into a school gymnasium, exactly where we're going.

MaxSo from Birthright citizenship to sports fields, same. In Thread, different jersey.

BlakeYeah, and this one's the one people think they know because they've been yelling about it for three years.

MaxLittle v. Hecox, West Virginia v. B.P.J.," argued January thirteenth; Idaho and West Virginia both bar transgender girls from competing in female school sports based on biological sex at birth.

BlakeAccording to SCOTUSblog and CBS News, the conservative majority appeared ready to uphold both bans. Court watchers are calling it likely six to three.

MaxWhich, honestly, you could have predicted by looking at Skrmetti last term.

BlakeRight, right, right, right, because here's where cable news completely checks out. The real question isn't whether the ban survives, the question is what legal standard the court uses to get there.

MaxThis is where it gets good. In Skrmetti, the transgender medical care case from last term, the court declined to declare transgender people a quasi-suspect class requiring heightened review. It applied rational basis instead. Low bar states get wide latitude

BlakeSo if the sports cases follow the same logic . . .

Speaker 3States don't have to prove much—just the rational reason,

Maxcompetitive fairness in women's athletics, that clears the bar easily. Right,

Blakeand here's the frame I keep coming back to: if this ruling lands on rational basis, it's actually a federalism story more than a culture war story. The twenty seven states with bans are validated. The twenty seven states with bans are validated. But the states that allow transgender athletes to compete are probably left alone too.

MaxWait, so both sides of the policy debate could theoretically survive?

BlakeThat's the court's version of calling it down the middle. Let the states sort it out. And from a center-right constitutional lens, that's actually a defensible position.

MaxHmm. I mean, I get it. I'm on both sides a little bit on this one because there are real kids in the middle here. Becky Pepper-Jackson in West Virginia started fighting this in middle school. Cool. That's not an abstraction.

BlakeNo, and I think the honest thing to say is you can believe the state bans are constitutionally defensible and acknowledge that the bluntness of a categorical ban catches kids in genuinely complicated situations.

MaxTwo things can be true.

BlakeTwo things can be true, and the connective tissue here, the link back to Slaughter and Birthright citizenship, is exactly what Blake flagged at the top: who holds the power to define categories that affect affect people's daily lives. Congress set up independent agencies; court may let the president override that; the Fourteenth Amendment defined citizenship; administration tried to redefine it; states defined female sports categories by birth sex; court looks ready to let them keep that.

MaxSo whether it's a regulatory agency, a citizenship clause, or a school sports roster, the court is drawing this same line: broad state and executive power, narrow judicial gatekeeping. Gatekeeping

BlakeThat answer lands in June, which brings up something worth holding onto for the last segment.

MaxThese rulings drop right as the midterm primary calendar heats up; every challenger in a competitive House race will run on at least one of them. Understanding the constitutional basis, not just the cable take, is the only position that actually holds up under pressure. I'm short calibration mine-short calibration mine. So here's the honest question before we land this plane. Which of these three rulings do you think moves the needle most six months from now?

Speaker 4The independent agency case: if the court okays firing Fed-adjacent officials, every market signal we trust starts carrying political risk it doesn't currently price in. That's a slow burn.

MaxNothing, I'll take birthright citizenship, a loss for the administration keeps the 14th Amendment in- intact, but the argument doesn't die, it just migrates to Congress. Either way something shifts.

BlakeRight, right. So, action item, Blake. What do people actually do Monday morning with energy? Two things, 15 minutes max. First, pull up the 14th Amendment Citizenship

MaxClause. Mm-hmm.

BlakeAs one sentence, read it yourself before anyone tells you what it means. One sentence, one sentence. Then look up how your two senators voted on the last independent agency confirmation.

MaxConfirmation.

BlakeWow!

MaxThose votes tell you exactly where they stand on every case we cover today.

Speaker 4That's the whole habit-Primary sources before the takes.

MaxThe rulings land in June. Primaries heat up in July.

BlakeMm-hmm.

MaxYou'll want to already know what you think.

Speaker 4Next week, we follow the decisions as they drop. Don't miss it. OK, so look, if you took one thing from today, let it be this: these three cases aren't random news items. They're one story about who actually holds power in American life, and the court is writing that answer right now.

MaxAnd Max said it perfectly earlier with a referee analogy: The whole point of an independent agency was a ref who isn't watching the scoreboard for the guy who hired him. That image stuck with me all episode.

BlakeYeah, yeah, that one lands. And with rulings coming before July for CBS News, this is the moment to actually pay attention.

MaxSo here's your homework. Read the 14th Amendment's Citizenship Clause yourself, check your senator's votes on independent agency confirmation, and then call that office before June.

BlakeConcrete, I love it. All right, if this episode helped you see the week differently, share it with one person who needs it. Subscribe so you don't miss next Saturday.

MaxSeriously, Blake, thanks for digging into all this with me today, and thank you for being here, everyone. We'll see you next week.