There’s been lots of talk on the interweb machine about using platinum coins to solve the debt-ceiling crisis. Although it’s almost certainly just the theoretical fun of economics writers, and is extremely unlikely to happen, it does illuminate the intransigence of Republicans, the limited options of the president, and the distinction between what’s political overreach and what isn’t.
With Republicans vowing another debt-ceiling crisis, the administration is in a quandary over how to deal with this kind of madness. The Treasury Department can’t just print money to meet the nation’s debt obligations. But it does have unlimited power to mint platinum coins of any denomination—a provision that was meant for meeting the needs of coin collectors. This power could, in theory, be used to mint a $1 trillion coin that Secretary Timothy Geithner could then deposit at the Federal Reserve, at least temporarily, thus working around Republican intransigence about raising the debt ceiling.
The Atlantic Wire explains the possibility. Bloomberg’s Josh Barro makes the case. Business Insider’s Joe Weisenthal takes on the idea. There’s a petition afoot and Rep. Jerrold Nadler, D-N.Y., has endorsed the idea. Cullen Roche’s Pragmatic Capitalism started the bandwagon.
But it’s a bad idea. As wacky as the House GOP's idea is of using the debt ceiling as a hostage-taking weapon, this is no answer. Their intransigence shouldn’t be met by an equally unprecedented move.
As bad as the House behavior has been, using a small legal provision meant to please numismatists to leverage the nation’s debts seems, um, risky. The only analogy I can think of is the Court-packing mess of the 1930s when President Roosevelt, faced with a cranky Supreme Court that overturned his social-welfare programs and those in the states, tried to enlarge the size of the Court to fill it with more sympathetic appointees. After an outcry, the president backed down. But FDR at least tried to make the change by proposing a statute and forcing a Senate debate. (The bill never cleared the chamber.)
Minting the coins would seem even more imperious. After all, the Supreme Court in the 1930s was knocking down state minimum-wage laws and other expressions of the popular will. FDR had some momentum behind him. But President Obama would look despotic if he embraced this tactic. (Imagine all the pictures of King Obama on a coin.)
Is it a useful negotiating tool, at least? Perhaps, but unlikely. Yes, the Supreme Court did seem to respond to court packing, going on to uphold a minimum-wage law similar to one it previously struck down. But the House GOP would likely see such a move as an idle threat, and merely brandishing it might make Obama look more delusional than strong.
The administration earlier this year showed good sense in begging off another legal cul de sac—the 14th Amendment—to just ignore Congress on the debt ceiling. (See Jay Carney’s response to that.) President Clinton, on the other hand, argued for using the 14th Amendment option as a weapon. At least the 14th Amendment option would give the president some constitutional imprimatur, unlike minting up some coins.
In the end, just beating the House Republicans the old-fashioned way is the president’s best course.