America’s prosperity depends on a simple act of faith. Businesses spend billions of dollars today because they believe tomorrow’s government won’t change its rules after the money has already been spent.Imagine sitting in the boardroom of one of America’s artificial intelligence companies or electric utilities on June 30. On the table is a $15 billion investment to build data centers that will train frontier AI models through the next decade. Such projects require years of planning and billions of dollars before they generate a single dollar of revenue. Following the Supreme Court’s ruling in Trump v. Slaughter, some commentators argued that the economics of such long-term investments had suddenly changed. The more interesting question is whether they are right.Ostensibly, Trump v. Slaughter was about presidential authority to remove commissioners from independent agencies. But beneath the constitutional debate lies a much older economic question: Can a democratic government credibly commit to preserving its rules after businesses have made irreversible investments?
Every democracy faces this temptation. Once companies have sunk billions into factories, power plants, or AI infrastructure, political leaders may find it attractive to rewrite the rules. Investors understand this risk. That is why economists have long argued that prosperity depends not simply on promises of economic freedom, but on institutions that make those promises believable.America’s answer has never depended on any single institution. It rests instead on what might be called a credibility triangle.Congress establishes the legal rules. Regulatory agencies implement them through procedures that cannot be altered overnight. Courts ensure that both remain within the limits established by law. Together, these institutions make abrupt political shifts difficult while preserving democratic accountability.Many observers fear that Trump v. Slaughter has replaced regulatory stability with a four-year political pendulum. If every administration can replace commissioners whose priorities differ from the White House’s, won’t businesses begin assuming that regulatory policy lasts only until the next election?That concern is understandable, particularly in industries such as artificial intelligence. AI is no longer simply a software business. It is becoming an infrastructure business. Data centers, electric transmission, semiconductor fabrication, and advanced computing facilities require enormous sunk investments whose returns stretch over many years. Few corporate boards will approve those investments if they believe each election rewrites the rules.But that fear also overlooks how regulatory stability has actually been maintained in the United States.No president governs alone. Congress defines an agency’s authority. Courts review whether agencies have exceeded that authority. Rulemakings must satisfy procedural requirements that themselves take time and are subject to judicial review. Following the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, agencies also enjoy less discretion to expand their own regulatory powers than they once did. Restrictions on removing commissioners were only one element of this broader institutional design.Indeed, independent agencies have hardly been immune from policy swings. Communications policy, merger enforcement, transportation regulation, and financial oversight have all shifted substantially under administrations of both parties despite the existence of independent commissions. Stability has always depended on the interaction of Congress, agencies, and courts — not simply on whether commissioners could be fired.That distinction matters because America’s AI race requires two kinds of confidence at once. Businesses need confidence that the government can adapt to rapid technological change. But they also need confidence that the legal framework governing long-term investments will not be reinvented every four years.That confidence extends well beyond Washington. Much of the electric infrastructure that will power America’s AI future is regulated primarily by state commissions whose institutional structures remain untouched by Trump v. Slaughter. Those systems have long achieved both investor confidence and public accountability.None of this means businesses should ignore the court’s decision. Investors should watch carefully to see whether future administrations, Congress, and the courts continue to preserve the balance that has supported long-term investment. If regulatory uncertainty truly increases, corporate boards will respond exactly as economists predict: they will delay investments, shorten planning horizons, and demand higher returns before committing capital.RESTORING AMERICA: TRUMP ENACTED THE POLICIES THAT MADE LOWER GROCERY PRICES POSSIBLEBut the debate over Trump v. Slaughter has focused too narrowly on whether presidents gained authority over regulators. The more important question is whether America’s broader institutional architecture continues to earn investors’ trust.For more than two centuries, the U.S. has attracted investment not because any single regulator kept their job, but because no single institution could easily rewrite the rules on its own. Congress, regulatory agencies, and the judiciary have managed their tensions in ways that made long-term commitments credible. As long as that credibility triangle continues to hold, America’s investment climate will likely prove more resilient than many fear.Mark Jamison is a nonresident senior fellow at the American Enterprise Institute, where he works on how technology affects the economy and on telecommunications and Federal Communications Commission issues. He is concurrently the director and Gunter Professor of the Public Utility Research Center at the University of Florida’s Warrington College of Business.
