The Trillion Dollar Coin Fantasy: GOP Extremism Can’t Be Wished Away

Platinum coins can’t make congressional Republicans disappear, and platitudes won’t make them cave. If Obama wants a debt ceiling deal, he’s going to have to pay a ransom.

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Andrew Harrer / Bloomberg / Getty Images

The Federal Reserve building stands in Washington, Oct. 23, 2012.

After I spent the last two weeks explaining that the Treasury would mint a second Joe Biden before it minted a trillion-dollar platinum coin, that President Obama would make Kim Kardashian his chief of staff before making the coin fantasy a reality, it would be easy for me to gloat. So I will! The coin was a self-evidently wackadoodle idea, and the pundits who fell in love with it should have remembered Obama isn’t in vaudeville. But there’s more to say about the coin farce than my four favorite words. (Count ’em: I…told…you…so.) The debt ceiling disaster that the coin was supposed to avoid through metallic magic still looms. And the understandable impulses that led otherwise smart coiners to crusade for a WTF policy are producing equally muddled thinking about the next round of fiscal negotiations.

The idea of a trillion-dollar platinum coin was not quite as insane as it sounded. It was a response to the insanity of congressional Republicans, who have refused to raise the debt ceiling and let the U.S. pay its bills unless Democrats agree to massive cuts in Democratic priorities. The GOP is holding the economy hostage, using the threat of a confidence-destroying default to try to extract a policy ransom. The coin would have been an accounting trick designed to allow Obama to ignore the debt ceiling and keep fulfilling obligations Congress had already incurred. I could explain how, but it’s complex, which is why it was such a lousy idea; no politician wanted to explain why his response to a tough fiscal situation was to create a magic trillion-dollar coin out of thin air. Fortunately, now that the Obama Administration has officially rejected the coin, I don’t need to explain it.

(MORE: Is a $1 Trillion Coin a Good Way to Avoid Another Debt-Ceiling Impasse?)

It was always unrealistic to imagine that Obama could sidestep Republican extremism and obstructionism through a kooky loophole in monetary regulations. Big ideological battles don’t get settled through technicalities. But especially on the left,  there is still a powerful urge to believe that Republican extremism and obstructionism can be sidestepped. If only Obama sticks to his guns and refuses to negotiate with the hostage-takers over the debt ceiling, the argument goes, there will be a righteous public backlash against GOP political terrorism, and eventually Republicans will be forced to cave.

In my taxonomy of lefty Obama-bashing, these pipe dreams constitute a mixture of Heighten The Contradictions Liberalism and Choose Your Own Adventure Liberalism. In fact, current polls suggest that refusing to raise the debt limit is pretty popular, especially in the heavily Republican districts that Republicans tend to represent. Maybe a catastrophic default would change that, but Obama recognizes that a catastrophe for which Republicans were blamed would still be a catastrophe. Those of us who believe the modern GOP is an extraordinarily irresponsible party, remarkably brazen in its rejection of reality and consistency, still have to acknowledge that Republicans control the House of Representatives and can filibuster legislation in the Senate. They cannot be sidestepped or ignored or wished away. Congressional elections have consequences, too.

At his news conference Monday, Obama called out the Republicans for threatening to destroy the economy, and vowed that he wouldn’t negotiate with them over the debt ceiling. But as the president acknowledged, he has no choice but to negotiate with Republicans over the so-called “sequester,” $1.2 trillion in spending cuts that will begin March 1—and could tip the economy back into recession—unless there’s a bipartisan deal to replace it. And once you’re negotiating with terrorists, you’re negotiating with terrorists. It’s surely infuriating to try to reason with hostage-takers whose position is: If you don’t agree to hurt the economy with premature austerity, we’ll croak the economy with an unprecedented default. Alas, nobody said the presidency was an easy job.

(MORE: Hope Lives for $1 Trillion Platinum Coin Enthusiasts)

The larger point is that you don’t have to endorse hostage-taking to recognize that the demands of the hostage-takers are relevant to the negotiations. You can’t just say abracadabra and wish them away if you don’t want the hostage to get shot. If Obama wants a deal, he’s going to have to pay a ransom. The Republicans aren’t going to raise the debt ceiling for free; their supporters wouldn’t let them. Obama might get more of what he wants than the Republicans do—he has in the last four bipartisan deals—but he won’t get everything he wants. Khrushchev only took his missiles out of Cuba once Kennedy agreed to dismantle his missiles in Turkey.

None of this is meant to suggest that reaching a deal will be easy, or that Obama should give away the store. Republicans may insist on maximalist demands; the last four years have demonstrated that they don’t believe that standing up to Obama hurts them politically. Obama may be forced to issue California-style IOU’s to avoid a default; they might provoke a constitutional crisis, but unlike the platinum coin, they would at least be easy to explain. No matter what happens, though, protecting the recovery and avoiding a default will ultimately require a bipartisan deal. It won’t be perfect, and Ivory Soap liberals, for whom 99.44% pure is never good enough, won’t like it. But platinum can’t make congressional Republicans disappear, and platitudes won’t make them cave. If you don’t like it when Obama negotiates with terrorists, vote out the terrorists in 2014.

MORE: The Next Cliff: Another Round of Debt Brinkmanship Looms