With Congressional Republicans once again threatening to take the nation’s debt limit hostage for spending cuts, economic circles have been abuzz with the possibility that a standoff could be averted via use of a $1 trillion platinum coin. An obscure law, read literally, gives the Treasury Secretary the ability to mint platinum coins of any denomination. Deposited with the Federal Reserve, such a coin would give the federal government the ability to make payments without needing to issue more debt, defusing the possibility of a default due to the debt ceiling.
The idea has won the endorsement of Nobel Prize winning economist Paul Krugman, a former head of the U.S. Mint, and Harvard Law School Professor Laurence Tribe. “Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely,” Krugman wrote.
Today, NBC’s Chuck Todd asked White House Press Secretary Jay Carney if the administration had ruled out using the platinum coin option. Carney refused to disavow the idea, instead reiterating that Congressional Republicans should simply raise the debt ceiling:
TODD: Do you guys have a position on this trillion dollar business?
CARNEY: Uh, I would simply go back to what I’ve said. The option here is for Congress to do its job and pay its bills, bills that have already been racked up. [...]
TODD: On the 14th amendment you flatly said you believe you do not have the power under the 14th Amendment. Do you believe you have this power to mint a trillion dollar coin?
CARNEY: There is no Plan B. There is no backup plan. There is Congress’s responsibility to pay the bills of the United States. This is not about future spending. We will have that debate and continue to have the debate about the budgets that we design and the path forward in the deficit reduction. And the president’s principles in this matter are very clear. You know, there is no alternative to Congress raising the debt ceiling. It’s its responsibility. Congress has to pay the bills of the United States. That is an obligation that they assigned to themselves.
TODD: You’re a little evasive in your answer. Are you trying to leave room or not leave room?
CARNEY: There is no substitute for Congress extending the borrowing authority of the United States.
The coin doesn’t allow for new spending; it simply would ensure that America continues to pay bills that Congress has already run up. (The Federal Reserve would also sell bonds in order to prevent inflation.) And with Congressional Republicans threatening to push the country into a default in order to get their way on the budget, it seems that the White House is, for the moment at least, unwilling to take its own last resort off the table, silly as it may sound.