Posted by AzBlueMeanie:
"For every complex problem, there's a solution that is simple, neat, and wrong." - H.L. Mencken
So it is only fitting that Ronald Reagan's image should appear on the $1 trillion dollar platinum coin that some are proposing as a simple solution to the Tea-Publican economic terrorists taking this country hostage over the federal debt ceiling and defaulting on the U.S. debt, in violation of the 14th Amendment to the Constitution, and causing another economic catastrophe.
Tea-Publicans have always wanted a Reagan coin. This would f#%king serve them right! (h/t graphic democratic underground.com)
Former Congressman Michael Castle accidentally enabled the weirdest possible solution to the debt ceiling. Michael Castle: Unsuspecting godfather of the $1 trillion coin solution:
As Brad Plumer explained last month, the Treasury secretary has the authority to mint platinum coins of any quantity and denomination. So, hypothetically, Tim Geithner could mint a $2 trillion coin, deposit it in the Treasury’s account at the Federal Reserve, and use that money in lieu of additional borrowing. Suddenly, no one needs to worry if Congress refuses to raise the debt ceiling.
The platinum-coin idea has now been endorsed by the likes of Paul Krugman and Rep. Jerrold Nadler (D-NY). It’s also the subject of a White House petition with 1,730 signatories. The hashtag #mintthecoin, created by economist Stephanie Kelton and spread by supporters like Business Insider’s Joe Wiesenthal, is catching on, at least among the financial press.
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[Castle] drafted a bill, the Commemorative Coin Authorization and Reform Act of 1995, that included this provision:
Notwithstanding any other provision of law, the Secretary of the Treasury may mint and issue platinum coins in such quantity and of such variety as the Secretary determines to be appropriate.
The logic, Castle tells me, was to enable the Treasury to put out collectable platinum coins of a variety of sizes. At the time, collectors had complained that the smallest platinum coins available were too expensive, a problem the bill was supposed to enable the Treasury to correct.
Dylan Matthews provides the history of the bill and its enactment into a public law. "When I told Castle about the platinum coin solution for the debt ceiling, he was baffled."
“That was never the intent of anything that I drafted or that anyone who worked with me drafted…It seems to me that whatever’s being proposed here is a stretch beyond anything we were trying to do,” he said, audibly astonished.
So the platinum coin plan plainly goes against the legislative intent of the Commemorative Coin Authorization and Reform Act of 1995, as described by its congressional author.
But wait . . . Philip Diehl, the former Mint director and Treasury chief of staff who, with Rep. Mike Castle, wrote the platinum coin law and oversaw the minting of the first coin authorized by the law, disagrees. Former head of U.S. Mint: The platinum coin option would work:
Tuesday morning, I got an e-mail from Philip Diehl . . . It’s worth publishing in full:
I’m in a unique position to address some confusion I’ve seen in the media about the platinum coin proposal so I’ve provided a brief that I hope might be helpful.
* First, the law is not “poorly written”. The language accomplishes precisely what was intended, though it also had unforeseen consequences; but then how many other laws have had unintended consequences?
* In minting a $1 trillion platinum coin, the Treasury Secretary would be exercising authority that Congress has granted routinely for more than 220 years. The Secretary’s authority is derived from an Act of Congress (in fact, a GOP Congress) under power expressly granted to Congress in the Constitution (Article 1, Section 8). What is unusual about the law is that it gives the Secretary discretion regarding all specifications of the coin, including denominations.
* The accounting treatment of the coin is identical to the treatment of all other coins. The Mint strikes the coin, ships it to the Fed, books $1 trillion, and transfers $1 trillion to the Treasury’s general fund where it is available to finance government operations just like with proceeds of bond sales or additional tax revenues. The same applies for a quarter dollar.
* Once the debt limit is raised, the Fed could ship the coin back to the Mint where the accounting treatment would be reversed and the coin melted. The coin would never be “issued” or circulated and bonds would not be needed to back the coin.
* There are no negative macroeconomic effects. This works just like additional tax revenue or borrowing under a higher debt limit. In fact, when the debt limit is raised, Treasury would sell more bonds, the $1 trillion dollars would be taken off the books, and the coin would be melted.
* This does not raise the debt limit so it can’t be characterized as circumventing congressional authority over the debt limit. Rather, it delays when the debt limit is reached. Those who claim otherwise are misinformed or pursuing an agenda.
* This preserves congressional authority over the debt limit in a way that reliance on the 14th Amendment would not. It also avoids the protracted court battles the 14th Amendment option would entail and avoids another confrontation with the Roberts Court.
* Any court challenge is likely to be quickly dismissed since (1) authority to mint the coin is firmly rooted in law that itself is grounded in the expressed constitutional powers of Congress, (2) Treasury has routinely exercised this authority since the birth of the republic, and (3) the accounting treatment of the coin is entirely routine.
And if there are any doubts about the platinum coin method, Dylan Matthews explains an alternative method in his post:
But there’s another option. The American Eagle Palladium Bullion Coin Act of 2010, proposed by then-Rep. Denny Rehberg (R-MT) and signed into law by President Obama on Dec. 14, 2010, authorizes the Treasury secretary to mint $25 palladium coins “in such quantities as the Secretary may determine to be appropriate to meet demand.” So theoretically, Geithner could issue 80 billion $25 palladium coins, collectively worth $2 trillion, and deposit them in a similar manner.
So this idea is not as crazy as it sounds. Certainly nowhere near as crazy as Tea-Publican economic terrorists willfully defaulting on the U.S. debt over a temper tantrum about government spending and destroying the full faith and credit of the United States, and causing another economic catastrophe.
Paul Krugman has updated his position on the platinum coin solution. Be Ready To Mint That Coin:
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.
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So why not?
It’s easy to make sententious remarks to the effect that we shouldn’t look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable — if you’ve been living in a cave for the past four years. Given the realities of our political situation, and in particular the mixture of ruthlessness and craziness that now characterizes House Republicans, it’s just ridiculous — far more ridiculous than the notion of the coin.
So if the 14th amendment solution — simply declaring that the debt ceiling is unconstitutional — isn’t workable, go with the coin.
Krugman suggests that John Boehner's image should appear on the coin, but only dead people can appear on money. So "Ronaldus Magnus" it is.
Krugman gets snarkier today by suggesting Moral Obligation Coupons:
Don’t like the platinum coin option? Here’s a functionally equivalent alternative: have the Treasury sell pieces of paper labeled “moral obligation coupons”, which declare the intention of the government to redeem these coupons at face value in one year.
It should be clearly stated on the coupons that the government has no, repeat no, legal obligation to pay anything at all; you see, they’re not debt, and therefore don’t count against the debt limit. But that shouldn’t keep them from having substantial market value. Consider, for example, the fact that the government has no legal responsibility for guaranteeing the debt of Fannie and Freddie; nonetheless, it is widely believed that there is an implicit guarantee (because there is!), and this is very much reflected in the price of that debt.
So the government should have no trouble raising a lot of money by selling MOCs. It’s true that if they’re sold on the open market, they would probably sell at a substantial discount from face value, so this would in effect be high-interest-rate financing. But that’s better than either default or giving in to blackmail.
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Again, while this may all seem kind of dodgy, it’s important to realize that unless the president does something like this he will be forced to do something illegal: namely, fail to spend money that, by act of Congress, he is legally obliged to spend. Fancy footwork is by far a better alternative; and if it enrages Mitch McConnell, well, that’s just an extra bonus.
Of course, House Republicans mock the idea to save economy from threat of GOP sabotage, because they want to dismiss this idea as a silly gimmick (they are just sore that the GOP's Gimmicks-R-Us shop didn't think of it first).
But The Hill reports that Rep. Greg Walden (R-Ore.) plans to introduce legislation that would prevent the Treasury Department from minting a trillion-dollar platinum coin. GOP lawmaker to introduce bill to block Treasury from making trillion-dollar coin. "My bill will take the coin scheme off the table by disallowing the Treasury to mint platinum coins as a way to pay down the debt," Walden said in a statement on Monday. This is an admission by Walden that the platinum coin idea is legitimate and perfectly legal, or his bill to prevent it would not be necessary. [Two words for Rep. Walden: "presidential veto" -- just sayin'.]
So time to strike that "Ronaldus Magnus" $1 trillion dollar coin. And screw you terrorists! You have no hostage.