My argument is simple, and rests on reviewing the primary goals on each side of the Debt Ceiling standoff (Feb 2013 edition) and evaluating whether or not each goal would be achieved by minting a $1 trillion platinum coin and depositing it at the Federal Reserve in lieu of a legislative increase in the debt ceiling.
First, priorities for Obama:
- Avoid first default in US history;
- Avoid capitulating to Republican demands for extreme spending cuts and Social Security or Medicare reductions;
- Avoid market panic, recessionary decrease in private spending, wasted government expenditures, and increase in unemployment that would result even from "close call" on default;
- Embarrass Republicans by forcing them to abandon their debt ceiling absolutism.
All goals except for (4) are satisfied via #MintTheCoin.
Next, priorities for the Republican side (reality-based and otherwise):
- Use any vote for an increase in the debt ceiling to extract concessions from the President: extreme spending cuts, "grand bargain" cuts in Social Security and/or Medicare obligations, etc.;
- Realize the first default in US history and crash the US and world economy (some?);
- Satisfy Republican business supporters by avoiding the first default in US history and ensuing crash of the US and world economy (others?).
Obviously the extremist crash-the-economy goal (2) conflicts directly with the goals of Obama and most of the country. However, the Republicans' business and finance supporters have already made their position in favor of a clean debt ceiling increase crystal clear. Hence, proponents of (2) face opposition from their own leadership, business supporters, and a minority of their own party, who prefer (3). Importantly, given the price that will be paid for any serious brinksmanship, and the determination of Obama "not to negotiate" the debt ceiling increase on this round, the demands of (2) and (3) cannot be satisfied together in any scenario.
My main point, then, is that minting the $1 trillion coin allows the Republicans to achieve their goals (1) and (3), the second-best of all possible outcomes from their perspective. Importantly, their goal (1) is satisfied because, while they fail to extract spending and SS/Medicare cuts from Obama, they also avoid voting for any increase in the debt ceiling, and in this way retain their ability to demagogue freely about the ever-increasing debt that they have not (since 2009) and will never (until a Republican occupies the White House) countenance. As a side bonus, they get to give fiery speeches about Obama's unprecedented power grab.
Given the overall state of play, it is simply not possible to imagine an outcome that satisfies more of the conflicting parties' demands than would be satisfied by minting the $1 trillion platinum coin. A relatively modest price is paid for this, with each side required to surrender one of their lower-priority goals; as I have structured them, goal (4) for Obama and goal (2) for the Republicans.
Hence, while #MintTheCoin offers a unilateral, rather than a negotiated, end to the Debt Ceiling standoff, it does so while satisfying two of the three leading priorities on the Republican side, providing the second-best resolution that Republicans can hope for.
As such, it is clear that the #MintTheCoin approach, itself, represents the compromise solution that "moderate" voices in the media and politics claim (as always) to favor.