Some Democrats want to mint a $1 trillion platinum coin to avoid a potential debt crisis.
Two years ago, Congress suspended the debt ceiling — which bars the federal government from assuming a certain level of national debt — until August 2021. Because Congress has so far failed to vote on continuing the suspension or increasing the limit, Treasury Secretary Janet Yellen is warning that the federal government will run out of money on October 18.
As a result, some Democrats are resurrecting a proposal to mint a $1 trillion coin made of platinum and deposit it at the Federal Reserve — an accounting trick that would theoretically retire $1 trillion in government debt.
As Newsweek explains:
The idea of minting a trillion-dollar commemorative coin to shore up the nation’s finances comes from an obscure law that gives the U.S. Treasury Secretary the authority to “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.”
Proponents have picked up on the “denominations” note there, arguing that any amount could be minted at a normal coin size and deposited into the Federal Reserve to prevent a national debt crisis.
The prospect of a trillion-dollar coin is not new. President Obama explained in a 2017 interview that his advisers briefly considered minting the coin amid debate over the 2013 debt crisis.
“There was this theory that I had the authority to issue through the mint this massive $1 trillion coin and on that basis we could try to pay off US Treasurys,” Obama said on Pod Save America. “It was a very realistic possibility that we couldn’t get the votes for that and we couldn’t get those debts rolled over and we would be in a situation where we were technically in default. At that point, you were in uncharted territory.”
As the controversy over the federal government’s solvency emerges again, Rep. Rashida Tlaib (D-MI) tweeted “#MintTheCoin” — a hashtag that was used by proponents of the coin during the Obama-era debt crisis. Progressive economist Paul Krugman, for example, argued in 2013 that “if we have a crisis over the debt ceiling, it will be only because the Treasury Department would rather see economic devastation than look silly for a couple of minutes.”
As of two weeks ago, the Biden administration has rejected the measure. White House spokesperson Mike Gwin told Politico that “there is only one viable option to deal with the debt limit: Congress needs to increase or suspend it, as it has done approximately 80 times, including three times during the last Administration.”