Twitter is chattering about platinum coins. My Twitter feed had a message suggesting the president should be flipping a platinum coin as he makes his way through Congress for the State of the Union speech January 29. Paul Krugman's column brought the image into focus.
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.The Fourteenth Amendment option has been mentioned before. The president has been unequivocal about not negotiating about the debt ceiling. That point was not put into the White House New Years Day release by mistake.
For those new to this, here’s the story. First of all, we have the weird and destructive institution of the debt ceiling; this lets Congress approve tax and spending bills that imply a large budget deficit — tax and spending bills the president is legally required to implement — and then lets Congress refuse to grant the president authority to borrow, preventing him from carrying out his legal duties and provoking a possibly catastrophic default.
And Republicans are openly threatening to use that potential for catastrophe to blackmail the president into implementing policies they can’t pass through normal constitutional processes.
Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.
And frankly I'm looking forward to watching the upcoming fight. Somebody make some popcorn.
This morning a couple of pertinent commentaries.were floated from the Roubini stable.
► Does Obama Have A Platinum Coin Up His Sleeve? by L. Randall Wray.
President Obama might just be playing with us, but he’s been rather firm in his insistence that he is not going to negotiate over the debt limit this time around. Does he have an ace-in-the-hole? Many people are starting to wonder if he’s heard all this talk about the platinum coin. Could this be the way to break the Republican deadlock? If they refuse to raise the debt limit, the President orders the mint to stamp out a couple of nice new shiny platinum coins—in denominations of $1,000,000,000,000.► Mint the Platinum Coin? by Mark Thoma
That’s an attention-grabber.
A friend of mine who does not normally go all Ga-ga for Obama thinks the President has decided to exterminate the Republican party—and he’s going to use the debt limit debate to do it. Here’s my friend’s argument:
“I think he is luring the republican right into a trap. Please proceed, representatives, he is saying. Show us how you want to gut entitlements. Open your big mouths and show that you are willing to also close down the government and default on the debt. Then after they self assasinate he will move to the fourteenth amendment and the platinum coin. From the day he was elected in 2007 he began the ground game to win the next election. They were setting up the offices in the key districts in the swing states. I think he is engaged in a similar long range plan now. It is to character assassinate the republican right with their own words and by their own hand. The average life expectancy is 80. That means that every year 1.25% of the population exits through death and 1.25% comprised of the young enter. Over four years that is a shift equal to five percent of the electorate. He figures that shift adds maybe two percent to the democratic edge in an election. So he figures that with enough character assassination of the republican right and this demographic shift the republican right will be defeated by the end of his term and enough will have been done to prevent the GOP from picking up seats in the midterms.”
But what do you do if the other side refuses to play by the traditional rules? What if they are already using tactics that push far beyond the intent of congressional rules to impose their will? If one side is ignoring the traditional rules of engagement and hiding behind trees rather than marching in straight battle lines, is it okay to do so yourself? If the other side tortures, does that mean you should?As I said, pass the popcorn.
For torture, the answer is no, but in this case I think the answer is different. The Republicans will not play by fair rules of engagement, and worse they have taken members of the public hostage as a way to win/influence the battle (Saddam’s human umbrellas come to mind). If we don’t get our way, we’ll crash the economy and hurt people — the threat is clear. Obama, in his role of leader of all, not just Democrats, has chosen to, in effect, pay the ransom by giving in on key issues. But if the hostages can be freed another way, one that avoids giving in to the hostage-takers, it ought to be considered.
So perhaps it’s okay to match ridiculous tactics with ridiculous responses. Mint the coin, but make absolutely sure the public knows that it is only being done because the other side refuses to play fair, refuses to play by the explicit and implicit rules of political engagement. That’s key to winning the battle for public. Putting John Boehner’s face on the coin, as Paul Krugman suggested this morning, would certainly be a step in that direction.