The impact of three U.S. Supreme Court rulings on free enterprise

In the U.S. Supreme Court term that just ended, the justices issued three decisions that represent important victories for free enterprise. Two of the decisions may reduce the level of government regulation. The third provides real estate investors with the kind of certainty needed for economic growth.

The three cases are:

• Learning Resources v. Trump, which curbed the power of the President to impose tariffs without the approval of Congress;

  
  

• Trump v. Slaughter, which affirmed the President’s right to fire members of “independent” bureaucracies; and

  
  

• Pung v. Isabella County, which upheld a time-honored procedure for selling to investors through tax foreclosure sales.

Let’s unpack each of the three.

Learning Resources v. Trump was the famous tariffs case. President Trump claimed that Congress’s International Emergency Economic Powers Act (IEEPA) granted him almost unlimited authority to impose tariffs on foreign goods in “emergencies” that the President can declare almost at will. The President pointed out that IEEPA gave him power to “regulate . . . importation,” and that tariffs were a traditional way of regulating imports.

The court ruled against the President. It held that tariffs were taxes and that “regulate . . . importation” did not include the power to tax. It thus decided the case on statutory rather than constitutional grounds.

But you can argue that the President’s tariffs were unconstitutional as well.  By the Constitution, the people delegate both the power to tax and the power to regulate commerce to Congress, not to the President. Although Congress may permit the President to determine matters of detail, it cannot abdicate wholesale one of its core constitutional powers to another agency of government.

Yet the tariff opponents didn’t even raise the constitutional issue. They may have known that despite the inaccurate claims that we have a “conservative Supreme Court” (it actually is centrist), in recent years the justices have been reluctant to challenge Congress for exceeding its constitutional powers.

The second pro-free enterprise case was Trump v. Slaughter. The court ruled that because the President is the chief executive, Congress may not prevent him from firing members of “independent” government agencies.

In 1935, in Humphrey’s Executor v. United States, the court upheld Congress’s practice of limiting the President’s power to fire members of the executive branch. But most of the current justices had no problem overruling that decision. This is because, like many of the court’s opinions from the 1930s and early 1940s, the court’s reasoning was flawed almost to the point of being intellectually dishonest.

Yet this term in Trump v. Cook, the court did uphold limits on presidential firing with respect to a single agency: the Federal Reserve System.

By preventing Congress from limiting the President’s ability to dismiss executive branch officials, Trump v. Slaughter may discourage Congress from delegating so much authority to “independent” bureaucratic agencies. That is good for free enterprise.

The third case concerned tax foreclosures.

In 2023, the court decided Tyler v. Hennepin County. The court ruled that when the money from a tax foreclosure sale exceeds the debt owed, the county must give the surplus to the delinquent property taxpayer. Otherwise, the court said, the county would violate the Fifth Amendment’s rule against uncompensated “takings” of property.

By contrast, Pung v. Isabella County this year considered a sale where the proceeds were less than the amount owed and less than fair market value. The delinquent taxpayers claimed that the county had to recover the property’s fair market value at the sale or forgive the rest of the debt. In this case, though, the court upheld the county’s procedure.

Foreclosure sale rules have been around for a very long time, and there are serious problems with the Supreme Court finding constitutional reasons to meddle with them. I discussed this point three years ago in an article analyzing Tyler v. Hennepin County. This term, however, the court showed more restraint.

The result was bad for the Pungs but good for free enterprise. Markets work best when rules are simple and stable. Foreclosure sales are unpleasant, but they provide a way to clear debt, end title disputes, pay back taxes, and get property back on the market. If the Pungs had prevailed, foreclosure sales would have been clouded with questions like “Whom do we believe on the issue of fair market value?"

In constitutional cases, the Supreme Court’s job is not to decide what is good for free markets but to interpret the Constitution. But the Constitution is basically a pro-freedom document, so accurate interpretation often promotes free markets. When it does, we have reason to celebrate.