He also sacked the nation's top prosecutor.
In addition to outbursts on the street, Egypt's judges have reacted. All but seven of Egypt's 34 courts and 90% of its prosecutors went on strike Monday in protest, said Judge Mohamed al-Zind of the Egyptian Judge's Club. He described Morsy's edict as "the most vicious ... attack on the judicial authority's independence."
Morsy insists he's trying to protect Egypt's fragile Arab Spring revolution, not accumulate unchecked power. His moves "cemented the process that would create the institutions that would limit his power, define the constitution and have parliamentary elections so that we can say this is a democracy," said Haddad.
Senior presidential aide Essam El-Erian called concerns about Morsy's edict overblown, blaming the protests on "counterrevolutionary forces" loyal to Mubarak's party. Polls show "an overwhelming majority supporting President Morsy and his decisions," Haddad said Monday.
But that's not how his political foes -- seen as "heretics" by many members of the Muslim Brotherhood, according to Washington Institute for Near East Policy fellow Eric Trager -- look at the situation.
Amr Hamzawy, who'd been in the now-dissolved parliament, said action is needed to prevent more "suffering" under a president with "sweeping powers," as Egypt had for 60 years under men like Mubarak, Anwar Sadat and Gamal Nasser.
"Morsy is the ... president who has sweeping executive (power), sweeping legislative (power) and ... puts himself above the judicial branch of government," said Hamzawy, founder of Egypt's Freedom Party. "That is a very dangerous mix, which can only lead to a dictatorship."
The rest of the world is watching, too.
Former U.S. diplomat Jamie Rubin said Morsy's edict "brings to mind all the fears that people in that part of the world have had about the Muslim Brotherhood when it comes to democracy."
The unrest raises new concerns about stability in Egypt, which has gone through two years of protests and turmoil.
"The majority of the people are really suffering, and they were looking forward to some stability," said Radwan, the former finance minister, who served under Mubarak as well as in the government that followed him. "I'm afraid that this constitutional declaration has blown it up."