Holding the Debt Limit Hostage is Unconstitutional, So Why Not Get Around it by Minting a Trillion-Dollar Platinum Coin?

It's bizarre how people distinguish between serious and unserious proposals.


With another debt-ceiling show-down looming, talk of the 'platinum coin option' – declared deeply unserious in 2011 – is once again gaining some traction. Here's Josh Barro over at Bloomberg:

I'm glad to see Representative Jerrold Nadler lending his support to the idea that President Barack Obama should avert a debt-limit crisis by issuing large-denomination platinum coins, as permitted by 31 USC § 5112.

In case you're not familiar with this idea: In general, the Treasury Department is not allowed to just print money if it feels like it. It must defer to the Federal Reserve's control of the money supply. But there is an exception: Platinum coins may be struck with whatever specifications the Treasury secretary sees fit, including denomination.

This law was intended to allow the production of commemorative coins for collectors. But it can also be used to create large-denomination coins that Treasury can deposit with the Fed to finance payment of the government's bills, in lieu of issuing debt.

Most argue that we should just issue a $2-trillion dollar coin and be done with it. Barro's suggestion is a little more elaborate:

If Republicans start issuing a list of demands that must be met before they will raise the debt ceiling, Obama should simply say that he will issue platinum coins as necessary to pay government bills if he cannot borrow. But, to avoid causing long-term inflation expectations to skyrocket, he should pledge that he will have the Treasury issue enough bonds to buy back all the newly issued currency as soon as it is allowed to do so.

And then he should offer to sign a bill revoking his authority to issue platinum coins -- so long as that bill also abolishes the debt ceiling. The executive branch will give up its unwarranted power to print if the legislative branch will give up its unwarranted restriction on borrowing to cover already appropriated obligations.

At Mother Jones, Kevin Drum acknowledges that the law permits the treasury to issue such a coin and then scoffs at the notion:

I would just like to point out, once again, that this is ridiculous. During the very short floor debate on this amendment it was repeatedly referred to as a "technical correction," and that's obviously what was intended. Oklahoma Rep. Frank Lucas described it this way:

Also contained in the bill is a clarifying section inserting the word ‘‘platinum’’ inadvertently dropped when Congress authorized production of platinum and platinum bullion coins a few years ago....This is a small bill, but important to the mint and important to coin collectors. It has no cost implications whatsoever.

No particular restrictions were placed on the design or issuance of platinum coins, but this paragraph was plainly intended to apply to bullion and commemorative issues for coin collectors. That's all.

There is, apparently, a widespread belief that courts will uphold a literal, hypertechnical reading of legislative language regardless of its obvious intent, but I'm quite certain this isn't true. Courts are expected to rule based on the most sensible interpretation of a law, not its most tortured possible construction. I don't think there's even a remote chance that any court in the country would uphold a Treasury reading of this law that used it as a pretense for minting a $1 trillion coin. [Emphasis: mine]

I say: do it, and let the chips fall where they may. Who knows where the courts land, or even if the GOP has the chutzpah to take the case to court at that point in the game? Courts certainly can and do rule on narrow technicalities, and the threat of a global economic meltdown is a pretty strong incentive.

But it should also be on the table because there is nothing more ridiculous than a congressional minority threatening the economy by trying to extract unpopular concessions in exchange for paying the bills that Congress itself already ran up. Let's not pretend this is normal behavior we're dealing with.

In fact, let's not pretend it's Constitutional. Section 4 of the 14th Amendment says, “The validity of the public debt of the United States…shall not be questioned.” That's not terribly ambiguous. 

And here's the oath of office every member of Congress pledges to uphold:

I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.

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