The solution to the debt ceiling is not a trillion-dollar platinum coin. Congress must fulfill their constitutional duty to pay their bills. (More)
Earlier this week, President Obama, in his last press conference of his first term, drew a strong line in the sand against negotiating with Republicans over the need to increase our nation’s debt limit. As the president explained:
So to even entertain the idea of this happening – of the United States of America not paying its bills – is irresponsible. It’s absurd. As the Speaker said two years ago, it would be – and I’m quoting Speaker Boehner now – “a financial disaster, not only for us, but for the worldwide economy.”
So we’ve got to pay our bills. And Republicans in Congress have two choices here: They can act responsibly, and pay America’s bills; or they can act irresponsibly, and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy. The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.
The problem, of course, is that many of the House Republicans are so extreme and irresponsible that they are willing to let our nation default on its debts, or gets extremely close to doing so, in an effort to extract deep cuts to Medicare, Social Security, and other important programs. The question, then, becomes how does President Obama enforce his declared intent to not negotiate with Republicans over the debt ceiling?
Many folks on the progressive side of the aisle have, somewhat surprisingly, latched onto an obscure provision of the law governing the Treasury Secretary’s authority to make commemorative coins as providing a potential escape hatch for the Obama Administration on this issue. The applicable statute provides, in part, that:
(k) The Secretary may mint and issue platinum bullion coins and proof platinum 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.
While this provision was intended to apply only to the making of commemorative coins, the statutory language arguably does not stop the Treasury Secretary from making a platinum coin of a much larger denomination. As such, a number of progressives, led by Paul Krugman and others, have argued that President Obama should order his Treasury Secretary to mint a $1 trillion platinum coin, the value of which could be drawn upon for the money needed to keep the government running in the event that House Republicans refuse to raise the debt ceiling.
Progressives should not be promoting this $1 trillion platinum coin idea. For one thing, there are serious questions whether it would be legally valid. Krugman, Harvard Law School Constitutional law professor Laurence Tribe, and other insist that the $1 trillion coin idea fits within the plain language of the statutory provision allowing the Treasury Secretary to create platinum coins. Others, however, raise serious concerns, including noting that Congress plainly did not intend to authorize the Treasury Secretary to simply conjure up $1 trillion coins, and that “bullion” coins are generally understood to mean a coin with a value determined by its weight of a precious metal. Under that definition of bullion, the Treasury Secretary would need a massive amount of platinum to create the $1 trillion coin being discussed.
Setting aside the question of the legality of the platinum coin idea, the Obama Administration has rightly rejected the idea because the politics around it are horrible. Right now, Democrats have the upper hand on the debt ceiling issue. President Obama has rightly defined the issue as one of the U.S. needing to pay its bills and of Republicans recklessly putting our economy at risk in order to achieve ideological goals that the American public rejected in the 2012 elections. But had the Obama administration minted a $1 trillion coin as a way out of the mess, the public perception would have changed to one of President Obama doing something reckless. As Josh Marshall has explained:
But, as we’re already seeing on the standard misinformation sites, the second you start talking about the president minting a special trillion dollar quarter, people pop up and say, What the F#*% are you talking about?
In other words, the platinum coin has the additional magic of making it look like the president is the one doing something reckless and totally crazy rather than Congressional Republicans who are the ones really doing it.
That’s a problem.
The good news is that the $1 trillion platinum coin is not the only option here. Instead, in the event that House Republicans refuse to raise the debt ceiling, President Obama has two sources of authority in the U.S. Constitution that he can and should use to avoid default. The first is the Fourteenth Amendment, which provides that the validity of the public debt of the United States “shall not be questioned.” While the White House has rejected the idea of relying on the Fourteenth Amendment to avoid a default, many constitutional scholars believe that it provides the President with the authority to ignore the congressionally-created debt ceiling given that a refusal to raise that ceiling could cause the US to start defaulting on some of its debt.
An even more straightforward solution, however, is found in Article II of the Constitution, which requires the president to “take care that the laws be faithfully executed.” What a refusal to raise the debt ceiling would do is create a conflict between laws that need to be faithfully executed. On one side would be the debt ceiling, which prevents the president from borrowing more money to pay our nation’s bills. On the other side is all of the legislation passed by Congress that created those bills, and the 1975 Supreme Court decision in Train v. City of New York that forbids the president from unilaterally refusing to spend money authorized by Congress. Or, as the president explained in his press conference:
The debt ceiling is not a question of authorizing more spending. Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to. These are bills that have already been racked up and we need to pay them.
In a conflict between the laws that the president is required to faithfully execute, given the Supreme Court’s holding in Train, the president must ignore the debt ceiling and faithfully execute all of the laws requiring spending that is important to our economic, social, and financial well-being as a nation. The alternative – faithfully executing the debt ceiling limits while breaking some or all of the laws requiring spending – would be disastrous, as President Obama explained:
If congressional Republicans refuse to pay America’s bills on time, Social Security checks and veterans’ benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn’t get their paychecks. Investors around the world will ask if the United States of America is, in fact, a safe bet. Markets could go haywire. Interest rates would spike for anybody who borrows money – every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire. It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession, and ironically, would probably increase our deficit
In the debt ceiling fight, President Obama has the upper hand because his message – that America must pay its bills – is one that is easy to communicate and that the American public inherently understands and accepts. In addition, the Constitution provides the President with the authority to avoid a debt ceiling crisis in ways that are fully consistent with that basic message. President Obama was correct not to muddy the waters and throw away this political advantage with silly talk of $1 trillion platinum coins.