Home  »  Economy  »  White House Refuses To Rule Out Minting $1 Trillion Coin To Sidestep Debt Ceiling Increase


Jan 9, 2013 Comments Off Spit Stixx

Excerpted from The Hill: The White House on Wednesday declined to rule out minting a “platinum coin” to avoid default if Congress fails to raise the debt ceiling.

Press secretary Jay Carney on Wednesday said there is “no substitute” for Congress raising the borrowing limit but declined to explicitly rule out issuing new currency to pay the government’s debts.

“The option here is for Congress to do its job and pay the bill,” Carney said. “There is no Plan B, there is no backup plan. There is Congress’s responsibility.”

A loophole in federal law — originally designed to allow for the manufacture of collectable coins — appears to give the Treasury secretary unchecked ability to mint platinum coins of any denomination. Treasury could hypothetically mint a $1 trillion coin, deposit it at the Federal Reserve and continue paying bills even if the $16.4 trillion debt ceiling is reached in a few weeks — and all without congressional approval.

The idea is getting attention from Democrats who argue President Obama should not negotiate spending cuts with Republicans in return for an increase in the debt ceiling.

Carney was asked repeatedly to clarify the White House’s position on the platinum coin during his daily press briefing, but seemed to downplay — although not completely proscribe — the idea.

“You can speculate about lots of things,” Carney said. “Nothing needs to come to these kinds of speculative notions about a problem that can be resolved by Congress doing its job.”

House Republicans are taking note of the chatter about sidestepping Congress and plan to introduce legislation to “take the coin scheme off the table.”

“This scheme to mint trillion-dollar platinum coins is absurd and dangerous, and would be laughable if the proponents weren’t so serious about it as a solution,” said Rep. Greg Walden (R-Ore.). “I’m introducing a bill to stop it in its tracks.”

Democrats in Congress have begun to debate the various executive powers that Obama could invoke if the debt-ceiling isn’t raised. They say the president should take executive action to prevent default and then force Republicans to take him to court.

Carney has previously ruled out the idea of the president using the 14th Amendment to continue federal borrowing once the debt ceiling is hit, an idea supported by many Democrats. Section 4 of that amendment says that “the validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Asked Wednesday whether anyone on the White House’s staff was examining the coin idea, Carney said that he did not “know of” any effort, and referred additional questions to the Treasury Department.

“The president’s belief is Congress needs to do its job.”

After it was pointed out that he was leaving a narrow opening for the White House to adopt the proposal, Carney shrugged and laughed.

“I think I answered it thoroughly. At length. With great detail,” Carney said.

The United States hit the debt ceiling on Dec. 31, and is using “extraordinary measures” to keep the government from default. Those measures are likely to run out by mid-February or early March.