The Weird Resonance of #Mintthecoin

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Here is a thought exercise. It’s 3013. You’re a historian, and you want to teach your students about the temporary dementia that gripped the political-media complex a millennium ago. I submit that you could do worse than to give them this article, a snapshot of how dysfunctional national politics converges with cable yakk-bait.

Start with a problem: Congressional Republicans are hellbent on using another round of debt-ceiling brinkmanship to win the kind of sharp spending cuts they were denied in the fiscal cliff negotiations. Last time they played chicken with the U.S. economy, our debt was downgraded. Despite his vow not to let Republicans use our full faith and credit as a bargaining chip, there is no obvious way for Barack Obama to avoid it. Congress controls the power of the U.S. borrowing authority. Republicans control the House. Therefore they can prevent our debts from being paid, even though they rung up the debts themselves.

A lot of people, cringing at the idea of another debt-limit standoff, are hunting for a work-around. Enter the trillion-dollar platinum coin solution.

According to U.S. law, the Treasury Department “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.” The obscure provision is apparently meant to deal with minting collector’s items. But it appears to be sound, albeit wacky, support for the notion that Treasury could mint, say, a couple of trillion-dollar coins and deposit it at the U.S. Federal Reserve as a way to circumvent Congressional Republicans’ unwillingness to pay the debts we have racked up. Some respected journalists, thousands of activists, a Nobel-winning economist and at least one congressman are pushing the idea. There is a White House petition and a Twitter hashtag (#mintthecoin) and a handful of cable hits on a slow news day.

This idea isn’t new. It surfaced the last time Republicans threatened to dash the economy to extract policy concessions, just 18 months ago, but was overshadowed last time by another legalistic run-around (the idea that Obama could invoke the 14th Amendment, which states that “the validity of the public debt of the United States…shall not be questioned,” to raise the debt ceiling without Congressional approval). It is also totally kooky, as even proponents concede. “Monetizing deficits through direct presidential control of the currency, in lieu of borrowing, is also no way to run a country. It’s silly, and it’s perfectly legal,” writes Bloomberg’s Josh Barro, who supports the idea. “Agreeing not to do so is therefore the ideal ‘concession’ for Obama to offer in return for Republicans agreeing to end the threat of a debt-default crisis.” In other words, the argument proponents are making is that refusing to pay debts we have already rung up is the kind of inane idea that deserves an equally inane empty threat in response.

As Kevin Drum writes, this sounds like “the kind of thing that Herman Cain would come up with.” Or perhaps you prefer Heidi Moore’s formulation: “an elegant solution – if you are a cartoon villain given to sitting in a vast underground bunker and innovating plans for world domination while petting a white cat.” Moore explains here why the idea isn’t remotely feasible, as do CNBC and Zero Hedge. The politics are obviously noxious, which is one reason why the White House isn’t touching the idea. But the specter of more hostage poltiics has convinced some very smart people that fighting stupid with wacky is a good idea. It feels, in a way, like an idea for our times.

43 comments
gysgt213
gysgt213

" But the specter of more hostage poltiics has convinced some very smart people that fighting stupid with wacky is a good idea. It feels, in a way, like an idea for our times."

Common sense, math and science don't seem to work so what are you going to do?

carolerae
carolerae

Hopefully, they'll have video of the demented, crazed Republicans demanding deep cuts in entitlements.  Aren't seniors on entitlements now or soon to be  their Base?  They're like suicide bombers or a lynch mob blaming Obama for profligate spending when he hasn't really signed off on any Legislation he really wanted for 2 years.  They sound crazy and all they need is a Rope or a Vest and I won't be able to watch anymore.  This must be some type of tax raising hangover or psychosis.

JohnDavidDeatherage
JohnDavidDeatherage

The Debt Ceiling is like the diet that you are starting tomorrow....  Everyday has a new tomorrow. 

sacredh
sacredh

"It’s 3013. You’re a historian, and you want to teach your students about the temporary dementia that gripped the political-media complex a millennium ago."

.

Teacher: I'd like us to look at the Tea Party faction that took control of the republican party 1000 years ago.

.

Student: What's a republican?

sipples
sipples

There are only two 100% legal ways to deal with a Congressional (Republican) failure to raise the debt ceiling (i.e. to respect the 14th Amendment). Method #1: Mint one or a couple trillion dollar platinum coins (which the Fed can entirely monetarily offset by selling bonds if it chooses). Method #2: Halt Congressionally *authorized* expenditures (only) in whatever manner the President chooses in order to equalize incoming receipts (i.e. taxes) with surviving expenditures, otherwise known as a (partial, but severe) government shutdown. Method #3 is that the President orders his Treasury Secretary to auction new de facto "Class B Questionable" bonds at whatever terms and rates the market is willing to pay, citing the 14th Amendment. However, Method #3 is of dubious legality and dubious financial market outcome since the 14th Amendment only deals with honoring existing debt. Investors might not be willing to pay much for "Obamabonds."

So those are the only two legal options, Alex: #1 and #2. If you don't like Method #1, you thus prefer that the President shut down the government. You owe your readers an explanation why. I would point out that the last time that happened (the last time we had a Democratic president) the shutdown obviously didn't eliminate the risk of another, so how about if the President chooses Method #1 and vetoes any attempt to eliminate the Mint's unlimited right to issue platinum coins unless Congress sends him a straight up bill which eliminates debt ceilings?

If Republicans don't like government deficits during periods of high unemployment (they should!) then they can raise taxes and/or reduce spending -- you know, math. But the Republicans refuse to do either in specificity because they'd be even less popular. It's that simple.

bobell
bobell

This is Time, right, not the Onion?

Can anyone tell me how to distinguish reality from parody these days?

Ivy_B
Ivy_B

Of course last time the debt ceiling was held hostage, political writers were all agog that it had never been done, the Repubs were behaving poorly, etc. Now that so much time has passed, they are speaking of it as the new normal. That's why the Republicans get away with inappropriate behavior - there is no consequence for it. 

kbanginmotown
kbanginmotown

First:  “an elegant solution – if you are a cartoon villain given to sitting in a vast underground bunker and innovating plans for world domination while petting a white cat.”

Then: "But the S.P.E.C.T.R.E of more hostage poltiics..." (emphasis mine)

I see what you did there, Alex. ;)


sacredh
sacredh

Drone strikes against republicans aren't an option? I mean everything should be on the table.

Diecash1
Diecash1

@AlexAltman -- No one seriously thinks that this is a good idea or a proper way to run a government's finances but I find your criticism less than compelling.  I think a better use of your time would be writing about what a pathetic excuse for legislators are these Republicans in Congress.  They have no interest in legislating; they prefer extortion instead.  Their intransigence is the real story here because, without that, there would be no need to consider such off the wall options.

All said, it's nice to have the Swamp writers back to work.


forgottenlord
forgottenlord

I just worked it out with a coworker.

If I'm a Tea Party member who only cares about being more Republican and Obama threatens a trillion dollar coin, I'm even more encouraged not to blink.  Why?

Situation 1: no Trillion dollar coin, US debt limit is hit, no other solutions given.  Economy crashes to a halt, everyone knows its because the Republicans refused to raise the debt limit on commitments they already made.  Republicans blamed, bad for America, Obama gets a bit of blame but likely gets out with minimal damage.

Situation 2: Trillion dollar coin.  Inflation ticks up from the significant increase in money in "circulation" (kinda) with no financial backing, Obama gets blamed for pulling a gimmick, minimal damage to the economy aside from aforementioned inflation which can be blamed on Obama.  Basically, Obama losses that round.

Why would I pass a debt ceiling deal?

Paul,nnto
Paul,nnto

I agree we need serious ideas for attacking the deficit. You know, like cutting Social Security.

outsider
outsider

 But the specter of more hostage poltiics has convinced some very smart people that fighting stupid with wacky is a good idea. It feels, in a way, like an idea for our times.

And that says it all. 

kbanginmotown
kbanginmotown

@gysgt213 Bravo, Gunny! Your comment has an understated brilliance that deserves some very deep reflection.

"Common sense, math and science don't seem to work so what are you going to do?" -gysgt213

Indeed.

Sue_N
Sue_N

@bobell The current GOP has killed parody. It's impossible these days to come up with anything more ridiculous than the actual reality of the baggers.

deconstructiva
deconstructiva

@Ivy_B If only there were clear, immediate consequences for Congress failing to do their job. A president can be impeached, but Congress can only remove themselves (ha!) or we try to vote them out every two years (that pesky gerrymandering thingy aside), but there's no recall provisions, if only. That's one amendment to add to the Constitution.

deconstructiva
deconstructiva

@kbanginmotown I always thought Blofeld's cat ran SPECTRE and Blofeld was just the mouthpiece. When I watch the early Bond films, I always root for the cat.

shepherdwong
shepherdwong

@Diecash1 The inanely-overlooked difference being that one inane idea might crash the global economy while the other might prevent a Republican-caused global depression. Other than that, the important point that Altman needs to make here is that Republicans and Democrats are just two sides of the same coin.

Sue_N
Sue_N

@Paul,nnto Can someone explain to me why Obama seems so dead set on cutting SS? I mean, I know why the GOP wants to (God forbid we use gubmint money to keep our seniors from eating dog food), but I don't get why this seems to attractive to Obama (or any Democrat). SS adds nothing to the deficit. Cut it out completely, and the deficit will remain. It's just nonsense to say, "I'm concerned about the deficit, so we're putting SS cuts on the table." It makes no sense.

I am used to GOPers making no sense. It bothers me immensely when Obama seems willing to go down that path.

sacredh
sacredh

The debt ceiling gets raised every year because we spend more than we take in. Every president raises it. Obama, Bush, Clinton, Bush I, Reagan, Carter...you get my point. If we don't raise the debt ceiling, we default on our bills. If we default on our bills we get our credit rating downgraded and it costs us more in interest to pay our debt. You raise taxes and cut spending and it reduces the amount we need to borrow. It's that simple.

Diecash1
Diecash1

@JohnDavidDeatherage @sacredh There is no point to a debt ceiling as the raising of the limit is to pay for debt already incurred.  It's simply a means to commit extortion.

sacredh
sacredh

My job is to help solve real issues by proposing creative solutions for common problems.

sacredh
sacredh

Sue_N, let me take a stab at it. There's supposed to be a surplus in SS. The surplus is nothing but IOUs. The surplus is gone other than as meaningless paper. The boomers are retiring and the payouts are growing faster than we can pay for them. It's been irresponsible action upon irresponsible action for decades. It's coming close to the time when the piper needs paid. Cuts are coming whether it's a change in how inflation is accounted for, means testing, raising the amount of people can earn before SS is no longer taken out or all of the above. Everyone knew it was coming but pretended that it wasn't. While in a theoretical world, the surplus is still there, in reality, Peter was robbed to pay Paul.

sacredh
sacredh

John, it was Cheney that said "Deficits don't matter". I'm pretty sure he's not a member of the left. Republicans had the White House, senate and house all to themselves from 2000 to 2006. Every budget during that term was bigger than the previous one. The government grew more during that 6 year period than during any other period since the New Deal. I work for the federal government (I get my check from the Dept of the Army). I work outside year round. We haven't had a raise in two years and we MIGHT get a raise this year of a half of a perecnt.

JohnDavidDeatherage
JohnDavidDeatherage

@sacredh I think the debt ceiling was and is an attempt to limit the growth in government, the yearly deficits it produces. The problem is the left leaning part of the government doesn't think deficits or debt matter.... It's the diet we are always going to start tomorrow.


sacredh
sacredh

So that every time we reached it, they would have to re-authorize it. It was done when both political parties were sane. That's no longer the case. It's the same with the yearly budget. We have a federal budget every year.Both political parties are guilty of spending more than we take in. We spend as much on our military each year as the rest of the world combined. Is that sane?

sacredh
sacredh

I'm sticking around because I'm having too much fun reminding the conservatives at work that we have a black man as President that has Hussein as a middle name. I don't do it often. 3-4 times a day maybe.

bobell
bobell

@sacredh I thought everyone in such a position with the federal government had retired.

sacredh
sacredh

Sue_N, maybe I'm just cynical, but I don't think we can get anywhere close to really cutting the deficit unless we make cuts to the Holy Trinity. Defense, SS and Medicare. I think cuts to SS could be accomplished by fixes in the system by drastically raising the thresh hold where money is taken out of people's checks, means testing and gradually phasing in a one or two year increase in the age. But first and foremost, the surplusses have to remain untouched

Sue_N
Sue_N

@sacredh Oh, I understand all that. SS is the cookie jar, and there've been more hands in it than cookies.

But what I don't understand is the rank nonsense of "must cut SS to fix deficit." One has nothing to do with other. Declaring we have to cut SS to fix the deficit is like me telling my kids to eat their veggies because there are starving children in Africa. It's just absurd.