Some politicians think they've found a silver bullet for the impasse over the debt limit, except the bullet is made of platinum: Mint a $1 trillion coin and use it to flood the treasury with cash. Even its serious proponents—Paul Krugman is one of them—call it a gimmick. ("Given the stakes, who cares if the approach sounds silly?" Krugman writes.) It's an oddball way out of an oddball accounting problem that will have severe consequences to average people's pocketbooks and the economy if it is not worked out in coming days. But despite all the jokes about who should go on the face of the coin—Chuck E. Cheese?—there's scholarship behind it, too.
However improbable, it is conceivable the government could turn $1 trillion into a coin of the realm without lawmakers having a say. How is this possible when the treasury secretary can't simply print money to pay public debts? The AP explains it's because a quirky law from more than 20 years ago seems to allow the administration to mint coins of any denomination without congressional approval as long as they're platinum. The intent was to help with the production of commemorative coins for collectors, not to create a nuclear option in a fiscal crisis. Oops.
Specifically, the law says the treasury secretary "may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time." This is that time, in the view of coin advocates. But Treasury Secretary Janet Yellen, the White House, and some Democrats slapped down the idea Tuesday, just as past leaders have done when the going got tough and radical quick-fixes emerged.
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"The only thing kookier would be a politically inflicted default," Sen. Mark Warner, D-Va, said of the coin. Said Yellen, "What’s necessary is for Congress to show that the world can count on America paying its debt." A platinum coin, she told CNBC, "is really a gimmick." The United States will hit the ceiling Oct. 18 unless Congress acts in time to suspend it. The two parties are in a stalemate in the Senate: Republicans unwilling to join Democrats in what used to be a routine exercise; Democrats holding back on using only their own votes to fix the problem. (More debt ceiling stories.)
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