I have been following the developments of the debt ceiling crisis and find the latest potential remedy something akin to a plot from a Robert Ludlum novel.
One ‘potential remedy’ to the dysfunctional political climate is to have the U.S. Mint strike a $1 trillion platinum coin. It would be minted within minutes at West Point and could be physically deposited at the New York Fed, that’s only a short helicopter ride away.
The Fed, once given the coin, would credit Treasury’s account with $1 trillion that would not count towards the national debt.
As I said, straight out of a Ludlum book.
The Washington Post writes this idea has been rejected.
As part of their internal review, White House officials have circulated internal memos with a range of untested theories should Congress fail to resolve the debt ceiling standoff, including the creation of a $1 trillion “coin” idea that has been popular among some liberals for years, the people said. But these options have been set aside as unworkable, the people said.
In the United States, Congress authorizes spending and sets taxing levels, and then separately sets a limit on how much the country can borrow. While Republicans like to spew over the debt ceiling matter, facts show Republican presidents have piled on more debt in the past 60 years than Democrats. They need to be responsible and increase the debt limit this week.
And the GOP should not think they are going to get some charm bracelet of goodies for simply doing their jobs! That behavior on the part of the conservatives will no longer be tolerated. Republicans need to get their hands dirty, too, and face up to the fiscal reality of the bills they have already passed. Like the moronic Trump tax bill that was an obscene giveaway to the wealthy.
Let us not mince words. A lack of increasing the debt limit would be a dramatic problem for the country! The international repercussions would send us into a recession.
So, would the government possibly consider the idea of a minted coin to stop the wreckage of the economy? Regardless of what has been stated thus far when the topic has been raised?
Paul Krugman wrote over the days in The New York Times his support for the idea.
Well, there’s a strange provision in U.S. law that empowers the Treasury secretary to mint and issue platinum coins in any quantity and denomination she chooses. Presumably the purpose of this provision was to allow the creation of coins celebrating people or events. But the language doesn’t say that. So on the face of it, Janet Yellen could mint a platinum coin with a face value of $1 trillion — no, it needn’t include $1 trillion worth of platinum — deposit it at the Federal Reserve and draw on that account to keep paying the government’s bills without borrowing.
Alternatively, Biden could simply declare that the 14th Amendment to the Constitution, which says that the validity of federal debt may not be questioned, renders the debt ceiling moot.
And there may be other tricks I don’t know about.
Would any of these approaches basically mean using silly gimmicks to avoid catastrophe? Possibly yes. But given the stakes, who cares if the approach sounds silly?
As for the thoughts of this blogger….well, the coin sounds supercharged with political and legal pitfalls. So perhaps we need to just pull the heads of the GOP from wherever and have them face facts.
Raising the debt limit has no direct impact on the size of the national debt. It has no impact either for more spending or freezing or restricting spending. The only thing that increasing the debt limit does is pay expenses previously authorized by presidents and Congress.
And so it goes.