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.