Paul Krugman became the latest and most prominent voice on the left to suggest a bizarre, unprecedented but entirely possible and legal option for Obama to get out of the coming debt ceiling mess that Republicans have planned for him over the next month: mint a trillion dollar coin. Yes, it’s absurd, but arguably less absurd than voluntarily letting the country default on its debts, and the “mint the coin” chatter has been growing louder.
Here’s the why and the how: Congress and the President have, through the normal legislative process, decided to spend a certain amount of money, and they are legally required to do this. They cannot, for instance, budget in a certain amount of money for, say, social security, and then not pay that money. However, this requires the U.S. going into (more) debt, and to do that, Congress has to authorize any increases in how much debt the U.S. can go into. This is known as the debt ceiling. The existence of the debt ceiling allows either party to hold the other hostage by threatening to not raise the debt ceiling and allowing the U.S. government to default on its loans.
But, there is a potential loophole: mint the coin. Specifically, a platinum, trillion dollar coin that the treasury would mint and then deposit in the federal reserve, allowing the U.S. government to operate without raising the debt ceiling. Why is this possible? Because of a provision in the law that allows the U.S. Treasury to mint platinum coins of any value. The provision is meant to allow the creation of collector’s items, but there’s nothing in the actual law specifying this. Krugman argues that this, weird as it is, is the best option for Obama right now:
Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely. He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious.
Krugman argues that the Republican party, by being utterly unreasonable, has brought this on themselves. Here’s his punchline finish:
This still leaves the question of whose face goes on the coin — but that’s easy: John Boehner. Because without him and his colleagues, this wouldn’t be necessary.
Though minting a trillion dollar platinum coin still seems to weird and politically dicey to actually happen, the Obama administration might as well hope that the chatter grows loud enough to provide some political leverage. Then, if it’s between minting the coin and going into default, they might as well mint the coin.