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President Obama delivers his 2011 State of the Union address
Whether he likes the idea or not, President Obama might be legally required to mint a trillion dollar coin if Congress fails to raise debt limit and he has no other way to meet Congressional spending mandates
Matt Yglesias argues that President Obama appears to be legally required to pursue the trillion dollar coin option in the event that Republicans refuse to raise the debt limit:
  1. Under the Congressional Budget and Impoundment Act of 1974 it's illegal for the president to spend less money than congress has appropriated—the Nixon administration had this idea that it could enact unilateral spending cuts, but it can't.
  2. Under the terms of the statutory debt ceiling, the president can't borrow extra money without congressional authorization.
  3. I don't believe there's a specific statutory prohibition on collecting taxes that congress hasn't authorized, but this principle is pretty literally the foundation of the entire fabric of common law.
  4. The Treasury Secretary can instruct the mint to create platinum coins of any denomination.
Given those facts, Yglesias concludes, the coin must be minted if Republicans refuse to raise the debt limit.

Keep in mind that under this theory, the coin would only be required if we bump up against the debt ceiling and there are no other options available for continuing spending money previously authorized by Congress. For example, we're already up against the debt limit, but the coin hasn't been necessary because we have been able to continue normal functions thanks to "extraordinary" measures. If Congress hasn't raised the debt limit by the time those measures cease to be effective, the coin would only be necessary if there weren't another way to to continue operating government.

Also keep in mind that this theory wouldn't in any way constrain Obama from negotiating over the debt limit, nor would it absolve Congress of the responsibility to eventually raise it (unless they want to embrace seignorage as as a long-term fiscal policy). But according to this theory, in the absence of an increase in the debt limit or some other way of continuing to meet Congressional mandated obligations, the president seems to have no other choice but to mint the coin.

Please sign the petition asking President Obama to mint the trillion dollar coin if Republicans attempt to force the nation into default.

Originally posted to The Jed Report on Wed Jan 09, 2013 at 09:31 AM PST.

Also republished by Daily Kos.

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