The US is facing a crisis of functionality. Between the abuse of the filibuster in the Senate, and a House of Representatives dominated by conservatives who would sooner see the government shut down than operate, Washington is broken. The fiscal cliff debate capped one of the worst two year periods in the modern era for the US government. Now, we have the debt ceiling debate looming, something we already saw unfold in 2011.
Different ideas are being pushed by those that fear Republicans will let us default. One idea that is really gaining steam in Liberal circles is the platinum, trillion dollar coin. Essentially, they want the treasury to print a platinum coin, place its worth at a trillion dollars, then deposit it at the Fed and use it to pay our bills.
While I enjoy the fact that the idea bypasses negligent GOP congressmen, I don't think this is the best course of action. There is a certain "jumping the shark" feel to printing a trillion dollar coin. I realize our government and politics have already become a bit of a joke, but this may be a step to far. There are other options on the table after all.
I believe a better course of action would be the constitutional option. According to the 14th Amendment, the validity of the nation's debt shall not be questioned. House minority leader Nancy Pelosi favors this approach. Given the extraordinary circumstances, I believe this is the action that should be taken in order to solve this problem, and prevent Republicans from pulling this stunt again, which they definitely will if President Obama negotiates with them this time around.
This is not our first rodeo on the debt ceiling issue. In 2011, Republican refusal to raise the debt ceiling unless the president gave them massive spending cuts led to our credit rating being downgraded by S&P. It was the first credit downgrade in US history. Previously, the debt ceiling was raised with little controversy. By playing games with our credit rating, Republicans have put the entire world economy in danger.
As some conservatives have pointed out, we can still continue to pay our debt obligations even if the debt ceiling is not raised. However, doing so would mean we have to stop spending in other areas. Furthermore, such a scenario would likely lead to our credit rating being downgraded again. We did not miss a debt payment in 2011, but S&P still downgraded the nation, citing the ineptitude of Washington. Failure to raise the debt ceiling would not inspire much confidence in our fiscal situation.
All options should be considered, but we must be careful to take the most sensible approach. It would be wise for Congress not to drag this problem out until the end as they did in 2011. Our economy is on good footing, and it would be reckless to put that in danger to score political points. Republicans can haggle over spending cuts during the sequestration debate. The nation's debt ceiling is too important to play games over.