So, congressional Democrats are scratching their collective heads to figure out a way to get to a vote on the floor with the hope they can sway nine moderate Repugnants to vote with them to raise the ceiling and prevent a possible default, which would have catastrophic effects. It is important to remember that raising the debt limit is NOT about allowing more deficit spending. It is about paying for expenditures already appropriated by the federal government. In household terms, it is about paying the rent or mortgage when they are due. The fiscal bind is exacerbated by the fact that Congress authorized a spending bill of $1.7 trillion to keep the government operating through to September, which the administration cannot do unless the debt ceiling is lifted. Then there is the 14th Amendment provision that, "The validity of the public debt of the United States, authorized by law … shall not be questioned,” seeming making the minting of a curiously valuable coin a legitimate exercise of Executive constitutional authority.
Given that a legislative fix will be difficult without submitting to fiscal extortion by radicals, what can the Biden administration do? One seemingly unorthodox idea that surfaced during the last debt ceiling crisis in 2011 is minting a trillion dollar platinum coin. A 1997 law gave the Treasury Department the authority to mint platinum bullion coins to sell to investors and numismatists, referred to as seignorage. Minting a trillion dollar denominated coin would create more money by depositing it at the Federal Reserve, which would be required to accept it at face value just as it does with printed currency. The idea first emerged on a blog site in 2010. An Atlanta attorney, Carlos Mucha, suggested it on financier Warren Mosler's blog. Mosler is one of the founders of MMT, or Modern Monetary Theory, which considers the size of national debt to be a lesser daemon as long as government has the taxing authority to keep it satisfied.
Now, this idea has already been rejected by Janet Yellen, Treasury Secretary, in 2021 as a "gimmick", that conflate monetary and fiscal policy threatening the vaunted independence of the private central bank, but several leading economic thinkers have endorsed it as a viable alternative to legislative gridlock. Perhaps a silly gimmick is necessary to counteract naked sabotage, opined Nobel economist Paul Krugman. It is clear that extremists are threatening to create the crisis in order to push through legislation they could not hope to achieve in the normal course of legislating. Using an arcane parlimentary procedure known as a "discharge petition" is a another possible solution, but that also would require some Repugnant support. These are not normal times. Creative solutions are needed to address unprecedented threats to our constitutional order. Absent that, the curiously valuable coin may be the only way forward.