The Platinum Bugs
Should Obama mint a $2 trillion coin to thwart the GOP? LOL.


Daniel Foster

The United States Mint’s portfolio is broad and varied, to be sure. America’s penchant for numismatics and its insatiable appetite for tokens (as it were) of recognition for sundry groups mean that commemorative coins have been struck to honor everything from Girl Scouts to eaglet chicks to Olympic high jumpers. And this is no mere nickel-and-dime operation. For more than a century, the Mint circulated legal-tender “half-eagles,” “eagles,” and “double-eagles” in $5, $10, and $20 denominations, and it still strikes precious-metal bullion to store value. In the year 2000, the Mint even authorized 150,000 units of a coin commemorating the thousand-year anniversary of Leif Ericson’s discovery of the New World; minted in Philadelphia, the coin was denominated at 1,000 Icelandic krónur.

But as far as I know, neither the U.S. Mint nor the Bureau of Engraving and Printing, which handles paper currency, has ever produced tender denominated higher than the Woodrow Wilson–emblazoned $100,000 bills it used for internal transactions in the 1930s.

Speaking of the 1930s, the impending debt-ceiling battle (nota bene: if you’re confused over which pending debt-ceiling battle, please consult the publication date atop this article) has convinced some that the U.S. Mint, and a little-known provision in the federal code, could deliver President Obama from the House GOP.

As first noted by Yale Law School professor Jack Balkin, Public Law 104-208 allows that

The Secretary may mint and issue bullion and platinum bullion 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.

This implies that the president could theoretically order the striking of, for instance, a pair of trillion-dollar-denominated platinum coins, deposit them at the Federal Reserve, and use the new balance-sheet flexibility to pay the bills, neatly circumventing the need to win the acquiescence of the Republican House.

And some are arguing that this is precisely what President Obama should do. Josh Barro has laid out the most detailed game plan at Bloomberg.

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.

Joe Weisenthal got this right this morning: Hitting the debt ceiling isn’t an option. It’s no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn’t count as a “concession,” and it’s nutty for Obama to have to give substantive policy ground to get one.