Is it time to "Mint The Coin?"
The recent election of Kevin McCarthy as Speaker of the House, and the subsequent empowerment of hardcore conservatives, has brought attention to the looming crisis of the federal debt ceiling. This debt ceiling, which must be raised later this year, is unique to the United States and poses a significant threat to the nation's economy. With Republican leaders signaling their desire for deep cuts to Social Security and Medicare, and Democrats pushing back against these cuts, the question arises: is there a viable alternative to this bitter fight and potential failed vote?
One potential solution that has been proposed is the use of the Treasury Department's authority to mint a "trillion-dollar platinum coin." This coin, deposited with the Federal Reserve, would provide the necessary funds for government spending without the need for raising the debt ceiling.
This idea, although it may sound like a joke, has been endorsed by some members of Congress, economic commentators, and even Nobel laureate Paul Krugman. The concept is based on a 1996 law which allows for the minting of coins for sale to collectors. This law was amended in 2000 to only allow "platinum bullion coins," and gives the Treasury Secretary discretion on the coin's "specifications, designs, varieties, quantities, denominations, and inscriptions."
The key here is "denominations," as the platinum bullion coin provision does not specify any amounts. This means that the Treasury Secretary has the authority to mint a coin with a denomination of one trillion dollars, deposit it at the Federal Reserve, and thus have available funds for government spending without raising the debt ceiling.
This may seem like a silly gimmick, but it is a viable option in the face of Republican threats to drive the nation into default or slash social spending. The "trillion-dollar platinum coin" is a creative solution that could potentially save the nation from a financial crisis. It is important that the Biden administration and Congress consider this option as a way to avoid the bitter fight and potential failure of raising the debt ceiling.