Debt ceiling: The case for a $1 trillion coin

It’s a solution to political gridlock that admittedly “sounds utterly insane,” said Brad Plumer in WashingtonPost.com. Soon after the new year begins, the Treasury Department will hit its $16.4 trillion borrowing limit, and unless Congress raises the ceiling, the government will default on its debts, U.S. credit will be ruined, and the economy will crash. Enter the “platinum coin option.” Current federal law authorizes the Treasury Department to mint platinum coins and assign them any value it wants. So President Obama could just direct the U.S. Mint to produce two shiny platinum coins worth $1 trillion each and deposit them in the Treasury, giving the government about two years’ worth of reserve capital. Just like that, “the ceiling is no longer an issue.” It’s highly unlikely Obama would go this route, and “the political blowback would be fierce.” But if Republicans engage in hard-core blackmail over the debt ceiling, “wacky ideas” to avert a national calamity may start to sound reasonable.

This is “banana republic territory,” said Kevin Drum in MotherJones.com, and it would likely trigger a court battle and a constitutional crisis. Obama has other, less cheesy options at his disposal. He could invoke the 14th Amendment (“the validity of the public debt...shall not be questioned”) and declare the debt limit unconstitutional. Or he could shut down parts of the government, which would be a “PR disaster” for Republicans. But it’s pure fantasy to think Obama would actually mint a 13-figure coin. “It’s the kind of thing that sounds cute to a blogger tapping away on his laptop, but there’s no way an actual president would ever try anything so obviously childish.”

Sure, it’s an extreme use of presidential power, said Matthew Yglesias in Slate.com, but “there is precedent for it.” In 1933 Franklin Delano Roosevelt unilaterally took the country off the gold standard, and “as a matter of substantive policy that was much more radical than evading the debt ceiling.” So while we don’t want the government habitually financed by “coin gimmicks,” keeping the trillion-dollar option on the table is a good way of signaling to Republicans that “default is not an option.” Deliberately defaulting, in fact, is about the craziest thing our government could contemplate, said Joe Weisenthal in BusinessInsider.com.“So if the choice is between default and a trillion-dollar platinum coin, we endorse the coin all the way.”

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