With an epic fight looming over raising the debt ceiling, Rep. Jerrold Nadler (D-N.Y.) and others are reviving a quirky old idea to keep the government from defaulting on its debt: Mint a trillion-dollar coin (or two), deposit it in the Treasury, and use it to pay the bills without having to push the borrowing limit above the current $16.4 trillion. "I'm being absolutely serious," Nadler told Capital New York's Reid Pilifant. "It sounds silly but it's absolutely legal." Actually, not everyone agrees. Here, four reasons the magic coin solution will never happen:
1. It's pretty much illegal
The idea of "minting a $1 trillion platinum coin is getting some blogospheric love" because, technically, the Treasury Department has the authority to make platinum coins with any value it chooses, says Kevin Drum at Mother Jones. There's one teensy problem: "This is ridiculous." The law permitting Treasury to mint platinum coins was pretty clearly intended to apply to bullion and commemorative platinum coins for collectors. "There is, apparently, a widespread belief that courts will uphold a literal, hypertechnical reading of legislative language regardless of its obvious intent, but I'm quite certain this isn't true."
2. It would make the U.S. a laughingstock
"Obviously, this is a gimmick, and no way for a 21st century superpower to deal with its finances," says Steve Benen at MSNBC. Resorting to a cockamamie scheme such as this would turn us into the butt of jokes told around the world. Of course, the fact that people are managing to talk about trillion-dollar coins with a straight face only shows how much "radicalized congressional Republicans" have already raised questions about our creditworthiness and turned our finances into a punch line by "refusing to allow a debt-ceiling increase to pay for spending" Congress has already approved.
3. It would not solve the real problem
Even if President Obama resorts to such an unorthodox move, says Josh Barro at Bloomberg, it won't fix anything. He should only do it if he also promises to issue bonds as soon as Congress allows it so he can buy back any new currency. Then he should push for "a bill revoking his authority to issue platinum coins — so long as that bill also abolishes the debt ceiling," which is the root of the problem. "The executive branch will give up its unwarranted power to print if the legislative branch will give up its unwarranted restriction on borrowing to cover already appropriated obligations."
4. A trick like this would make fiscal conservatives madder than ever
"Of course, this is not going to happen. Creating money out of thin air is hardly a solution," says Charles Riley at CNNMoney. "It could lead to even more concerns from those worried about inflation." An even more dangerous consequence would be that the many critics already railing about the Federal Reserve's monetary easing programs would be "apoplectic" if the Treasury Department "trumped" Ben Bernanke and literally minted a trillion bucks to pay the bills.