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According to Ezra Klein at the Washington Post:

The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it.

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me [Klein] today. “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” he said.

The ball is back in the corner of [insert name of favorite responsible branch].

Is this the Constitutional crisis pundits would have us believe, cousin to the "Fiscal Cliff?" Or, as President Obama declared - and press secretary Jay Carney repeats daily to inquiring media - Congress racked up the bills and it's up to Congress to see that they are honored.

Two calm observers, law professors Neil Buchanan at George Washington in DC and Michael Dork at Cornell, have surveyed the field. They point out that the President has three options, all of which violate Congressional statutes and Constitutional prerogatives. He can't unilaterally cut spending that Congress has authorized. He can't raise taxes to add revenues. And he can't ignore the debt ceiling law and keep paying bills when the Treasury exhausts its borrowing authority and Congress has not raised the limit. All the powers to tax, borrow and spend rest initially with Congress.

What's a President to do?

Buchanan and Dorf conclude: "[I]f Congress leaves the President no constitutional options, he must choose the least unconstitutional one: borrowing money beyond the debt ceiling." In so concluding, they give no weight to the 14th Amendment, Section 4, which says, in part:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.
Writing during the last debt ceiling debacle in 2011, Jack Balkin, professor of law at Yale, made a compelling argument that the 14th Amendment - as a post Civil War Reconstruction command not to let partisan politics interfere with the credit of the United States - speaks to the crises at hand.

Whatever President Obama does, the GOP-controlled House may threaten impeachment. Someone - a creditor perhaps or members of Congress - will probably take a case to the courts. Meanwhile, it seems highly likely that financial markets worldwide will react adversely to this failure to deal with an obvious problem. How adversely is anyone's guess.

The obvious realistic choice is to begin conducting serious negotiations over the sequester. Perhaps adults in both the Executive and Legislative branches will rise to the occasion, remove the debt ceiling as overkill and reassure the rest of the world that we have not gone totally out of our collective minds, at least not on these issues.

8:58 PM PT: errata with apology: The Cornell law professor is Michael Dorf.

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Comment Preferences

  •  Tip Jar (6+ / 0-)

    2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

    by TRPChicago on Sat Jan 12, 2013 at 08:26:17 PM PST

  •  The obvious. (6+ / 0-)

    The White House wants a crisis that will "force" the President to cut Social Security.  eom

  •  The "Congress" is not self-aware enough to (3+ / 0-)

    react in an appropriate way.  More correctly, the GOP-Led House is batsh*t insane.

    Happy little moron, Lucky little man.
    I wish I was a moron, MY GOD, Perhaps I am!
    —Spike Milligan

    by polecat on Sat Jan 12, 2013 at 08:40:27 PM PST

  •  no negotiations (1+ / 0-)
    Recommended by:
    Old Lefty

    first of all, the president can order treasury to take the coin. second, the fed is going to have to make a case that the coin is illegal, because plenty of legal scholars say otherwise- including balkin.

    The cold passion for truth hunts in no pack. -Robinson Jeffers

    by Laurence Lewis on Sat Jan 12, 2013 at 08:42:52 PM PST

    •  I doubt Treasury would say that it and the Fed ... (1+ / 0-)
      Recommended by:
      Old Lefty

      ... refused the Magic Coin alternative if the White House hadn't signed off on that conclusion.

      2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

      by TRPChicago on Sat Jan 12, 2013 at 08:52:38 PM PST

      [ Parent ]

      •  bingo (5+ / 0-)

        so, this is on the white house, not treasury. and it inevitably leads to calls for negotiations, which would lead to lousy deals, all blamed on the republicans.

        The cold passion for truth hunts in no pack. -Robinson Jeffers

        by Laurence Lewis on Sat Jan 12, 2013 at 08:57:06 PM PST

        [ Parent ]

        •  We ARE going to have negotiations on spending... (2+ / 0-)
          Recommended by:
          Old Lefty, Sharon Wraight

          ... priorities, probably directly on the sequester formulas that no one in Congress seems to like.

          Sure as you seem that any negotiation will produce a bad deal, is there a better alternative to negotiations? Any alternative, considering the remaining pieces of the unresolved "Fiscal Crisis?"

          2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

          by TRPChicago on Sat Jan 12, 2013 at 09:22:28 PM PST

          [ Parent ]

          •  the better alternative (4+ / 0-)

            is to stop pretending that the republicans are interested in negotiation, tell them that fiscal brinksmanship is off the table, as are medicare, medicaid and social security, and if they want to avoid the sequester, that's where negotiations can begin. of course, he already took the 250k-400k tax cuts off the table, as a revenue source.

            The cold passion for truth hunts in no pack. -Robinson Jeffers

            by Laurence Lewis on Sat Jan 12, 2013 at 09:25:17 PM PST

            [ Parent ]

          •  Yes. Mint the damned coin (0+ / 0-)

            and take away that legislative gun they're aiming at the head of the economy, for starters.

            Stop trying to find ways to cut Social Security and Medicare and instead come up with other ways to deal with the deficit.  You can start by abandoning that ridiculous 4T target number, which no one outside the Beltway and Wall St thinks is reasonable anyway.

            But all this discussion is moot since the President actually wants to cut these programs, and has been trying to get to this point for several years now.

            If he didn't want to be exactly where he is, he would have allowed the Bush tax cuts to sunset in 2010, while we still had the House. He would have allowed them to lift the debt ceiling before Boehner took over, too.

            The only thing which I believe took him aback was the fact that so many Teabaggers actually want to crash the debt ceiling and believe that doing so won't hurt anything--and, perhaps, the level of difficulty Boehner has controlling his caucus.

            if necessary for years; if necessary, alone

            by SouthernLiberalinMD on Sat Jan 12, 2013 at 10:52:40 PM PST

            [ Parent ]

          •  Just fix the typo. No need for "errata," imho. :-) (0+ / 0-)

            Join us at RASA: Repeal or Amend the Second Amendment. (Repeal will not ban guns, just help regulate them.)

            by Sharon Wraight on Sun Jan 13, 2013 at 06:19:36 AM PST

            [ Parent ]

    •  This area of the law is not Balkin's (0+ / 0-)

      expertise. I doubt he has pored through the entire statutory and regulatory scheme. The lawyers who work for Treasury have. In fact, some of them are probably the authors of many of the regualtions.

      Take the legal advice of lawyers who are opining in their area of expertise over the advice of an outside generalist every time.

      •  Balkin is a constitutional law scholar. (0+ / 0-)

        While I don't always agree with him, he is a careful prof whose views should be taken into account even if we don't ultimately accept them. As I read Balkin on the merits of the Magic Coin solution, he might not completely reject it but I don't believe he'd endorse it as a wise or even acceptable solution. (I'd reject it out of hand on both legal and political grounds. A direct Constitutional confrontation - if it comes to that - would be preferable to a Wizard of Oz-like fantasy.)

        I agree with you that Treasury and the Fed have all kinds of knowledge, wisdom and perspective in this area. Their views are critically important. On the particular question of minting a coin to defeat the debt ceiling, I think their conclusions are determinative. I'd be very surprised if President Obama would not defer. (The Fed, after all, is an independent body and this is its business.)

        I had a recent discussion on Kos about the Magic Coin notion, wherein a commenter channeled Harvard Prof. Tribe to the effect that the numismatic seignorage statute was obvious in its text. So obvious that legislative history could not be considered to limit it to just commemorative coins. I find it highly unlikely that a court taking up a seignorage case would ignore anything that would be argue for and against using seignorage to defeat Congress's debt ceiling law. SCOTUS might dismiss committee reports, floor debates and Treasury policy expertise, but it would at least take them into account.

        2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

        by TRPChicago on Sun Jan 13, 2013 at 08:43:40 AM PST

        [ Parent ]

  •  IF the Whitehouse did intend (1+ / 0-)
    Recommended by:
    Old Lefty

    to go to the platinum coin, they would, of course, first deny it, up until the very last moment, so they could say "our hand was forced to this extreme measure."

    So you can't put much confidence in the predictive value of any denials like that.

  •  Smart move by WH (8+ / 0-)

    The coin solution would be legal, but it would let Congress off the hook, making Obama the crazy one.  Republicans are going to have to do their job and pay for what they've spent.  

    Extricandae copiae.

    by Lee on Sat Jan 12, 2013 at 08:51:16 PM PST

    •  I second that emotion (0+ / 0-)

      This puts all the onus squarely on the other side. We go into default and the public, to to mention the Banksters will shit their pants while the formerly Grand OP will have eliminated itself entirely from future national status. Mush like the cliff of recent memories, this is a no-win for the r's and even more so after taking the magic coin off the table. I read this as "Its my way or the highway, men. You break it, you bought it.'

      Sen. Turtlewattles (R. Galapagos Islands)  knows this very well and would have loved the coin legerdemain, despite all protestations to the contrary because then its that damn power grabbin' Dem's trickery etc., etc. Now I suspect he is having that "I ate too much Brussel sprouts and boiled eggs and what happens next is really gonna stink" feeling. Mostly because if those Rand Paul lovin' Doogie House R's are going to pull the whole thing down, Sen. Turtlewattles can kiss ever being the Majority Leader buh-bye. Time to go spend some quality time back on the islands with the family, and I ain't saying Hay-wye-uh neither.

      Therefore, a way will be found to raise the ceiling over the objections of the Doogies before default.

      OR not.

      Just getting a handle on the knobs and dials.... Hey, don't touch that!

      by Old Lefty on Sun Jan 13, 2013 at 01:52:46 AM PST

      [ Parent ]

  •  Too, bad, really. I was looking forward to those (3+ / 0-)

    Franklin Mint TV ads with the toll-free numbers offering me the chance to buy my very own coin...

    "In a nation ruled by swine, all pigs are upward mobile..." - Dr. Hunter S. Thompson

    by Jack K on Sat Jan 12, 2013 at 09:06:18 PM PST

  •  Awesome! He won't use the 14th (2+ / 0-)

    and he won't mint the coin.

    He'll just ask real nicely for them to be good responsible legislators.

    Well, why should he try to avert crisis, when he wants to use the crisis as an excuse to cut Medicare, Medicaid and Social Security.

    if necessary for years; if necessary, alone

    by SouthernLiberalinMD on Sat Jan 12, 2013 at 10:47:21 PM PST

    •  Why are you so sure that President Obama would... (0+ / 0-)

      ... would "use the crisis as an excuse to cut Medicare, Medicaid and Social Security?"

      If he's as hell bent as you think to make such "cuts" (by the way, there are funding proposals for Medicare and Medicaid that are not "cuts"), why does he need the debt ceiling debacle to do it?

      The GOP is so eager to get him and the Democrats to swallow the bullet on those programs that it would embrace the opportunity under whatever opportunity arose. The President certainly doesn't need to aggravate the already ludicrous debt ceiling debacle to conduct negotiations and make proposals.

      Hard as it is for Progressives to accept, there must be some changes in Medicare and Medicaid funding. ObamaCare had Medicaid funding changes, after all, and I haven't seen any credible argument that nothing is a reasonable alternative to the rapidly growing Medicare funding issues. (ObamaCare will address some important health-care-cost-affecting issues for Medicare down the road, but that's a long and uncertain road.)

      SS is in no danger we need to address now. And I agree that Bowles-Simpson and previous Obama proposals on M&M were wrong-headed. The solution, however, is not The Perfect and, unfortunately, probably not even The Better.

      We're no better than the Tea Party if all we counsel is to kick those cans down the road indefinitely.

      2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

      by TRPChicago on Sun Jan 13, 2013 at 09:02:09 AM PST

      [ Parent ]

      •  He needs the debt ceiling debacle to do it (0+ / 0-)

        because the majority of the American people are dead against it. It's not the Progressives who don't want to accept it, it's 60-70% of the American people. The only way they will accept dismantling the Third Rail is if there's a Big Horrible Crisis making the President do it even though he really doesn't want to. And if the Republicans are the ones who are responsible for the Big Horrible Crisis, all the better.

        if necessary for years; if necessary, alone

        by SouthernLiberalinMD on Sun Jan 13, 2013 at 02:17:36 PM PST

        [ Parent ]

        •  OK, I see the reasoning, although I don't ... (0+ / 0-)

          ... agree the President really needs that cover. After all, he hasn't been exactly shy about proposing the chained CPI adjustment.

          The GOP is eager to start wherever Obama has ended. Not unreasonable negotiation for a hard-nosed crowd, but it may not work the way they want it too this time.

          No matter what, some funding fix(es) are going to be necessary. Revenue may be a prominent feature of negotiation - if Obama & Co. are smart - despicable as that will be to Protectors of the Wealthy.

          2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

          by TRPChicago on Sun Jan 13, 2013 at 04:28:25 PM PST

          [ Parent ]

          •  Well, here's my take: (0+ / 0-)

            Careful cuts and more revenue would be fine, though I agree with Krugman Stiglitz and others that working on the deficit right now is both unnecessary and perhaps ill-advised.

            Working on the economy first and then slowly reducing the deficit over time is the ticket, IMO.

            But if we're going to reduce the deficit more quickly, starting now, OK--we need to do it in ways that squelch demand the least and stimulate the economy the most.  Getting more revenue out of estate taxes and capital gains taxes would have been good--too late for that, though. Closing loopholes is fine--if they can do something about those 18,000 corporations located at one address in the Grand Cayman Islands, that would be great, though I'm not holding my breath.  Any subsidies left for fossil fuel companies, etc.? Cut those. The richest industry in the world doesn't need our tax dollars.

            Taking money out of defense is OK, though I worry about lost jobs there. Still, it's better than taking it out of anywhere else; given the huge amounts of money spent at the Pentagon, I can't believe that there isn't some waste there. But the cuts should not come out of the 99%'s hide at this time--they've lost enough hide already. So it should not be cuts to the VA or reductions of soldiers'/vets' pensions.

            So this is just your standard liberal take, which is that the 99% have had the shit beaten out of them for the last few years, and cuts to programs that benefit them have already been done to the tune of 1.4 trillion, I believe? that's what the cuts were from the summer of 2011, right? And they cut domestic non-security spending pretty much to the bone, according to my Congressman's top aide--and my Congressman is ranking member on Budget in the House.

            So, basically--ya wanna make cuts? OK, cut subsidies to really rich industries and make cuts to Defense, but be careful where/how you do it.

            All this is assuming that the motivation here is really to fix the nation's economy. If that is the motivation, it's awfully strange how little the whole economy is spoken of, versus how much the specifics of government budget are spoken of. It's almost like someone thinks that the government is the entire world.

            if necessary for years; if necessary, alone

            by SouthernLiberalinMD on Sun Jan 13, 2013 at 10:10:59 PM PST

            [ Parent ]

  •  The salient point is to not do what (2+ / 0-)

    could be done to cut the Banks out of leeching through debt.

    Followed upon: shucks, we just had to negotiate away the safety net.


    Markos! Not only are the Gates Not Crashed, they've fallen on us. Actual Representatives are what we urgently need, because we have almost none.

    by Jim P on Sun Jan 13, 2013 at 12:04:47 AM PST

  •  Wait A Minute..... (2+ / 0-)
    Recommended by:
    koNko, Old Lefty

    I thought Obama was going to gut SS when we were going off the fiscal cliff a few weeks ago.  That was the scuttlebutt here.  Wonder why he sent Biden in to broker a different deal then?

    Was Obama really ticked he couldn't gut SS then so he's going to gut it for reals this time?

    •  The sky IS falling (2+ / 0-)
      Recommended by:
      TRPChicago, snapples

      but the pieces are invisible. Oy with the backseat drivers. Our side is sometimes like the inverse of NASCAR "turn left, turn left, turn left".

      Politics is after all the art of compromise and just as I have had to compromise my personal values from time to time to pay the bills, that's how its got to work in DC too, though, doubtless, our vocal doubters have themselves always been uncompromising of their own principles. I'm glad its not MY job to walk around in Barak's shoes, and I'm pretty sure I would do a poorer job of it than he has.

      He ain't perfect but he's a damn sight better than the alternative (remember RMoney, Grumpy Old Man, Ryan and Palin?). Too bad that's the way things work, if they work at all, but that's the way it is. Moreover, if you listen, the cost savings the WH is proposing, negotiating for drug prices, shifting the treatment model by paying for outcomes not procedures, etc. are mostly wise, necessary and can net significant savings without cutting benefits while improving the quality of service.

      This is the kind of discussion we could be having without the pearl clutching. The sequester and debt ceiling issues are both artificial crises and both can (and will) be resolved at the stroke of a pen, and any minor damage inflicted while getting there can be repaired when the calculus changes in two years with a better economy and the inevitable withering of the tBaggers caucus.

      And, having the 'entitlements' discussion its a great way to pin down the other side publicly by insisting they finally show their cards and specify exactly where they think the cuts should be made, which, as we all know, is a loosing argument for them. It's just plain old two dimensional chess with an eye to the long game, and its checkmate in '14. BECAUSE, specifically, it is they who will not budge, not us.

      Politics is also, and in pariticular here in the Good 'Ol, a continuation of war by other means, and I mean the Civil War. The tBaggers represent the lst gasp of the self referential Noble Cause of white supremacy and the resentments of the loosing side. They are still fighting to overturn the federal authority, this time by destroying it from inside the congress rather than on the battlefield, and they are going to lose this time too.

      Just getting a handle on the knobs and dials.... Hey, don't touch that!

      by Old Lefty on Sun Jan 13, 2013 at 03:07:05 AM PST

      [ Parent ]

  •  The debt ceiling statute is there (0+ / 0-)

    so that Congress is not required to approve each separate issue of public debt.

    http://en.wikipedia.org/...

    Surely, we do not want to go back to that!

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