May 21, 2013
Obama Is Right on the Debt Ceiling
Posted on Jan 13, 2013
By Bill Blum
The Platinum Coin
First proposed by a Georgia attorney named Carlos Mucha, who blogs for various Internet sites under the nom de plume “beowulf,” what may be the most ingenious strategy of all calls for the president to order the Treasury Department to mint one or two trillion-dollar platinum coins to be deposited with the Federal Reserve. The Fed in turn would credit the face value of the coin to the government’s general account, which the administration thereafter could draw on to pay its bills without issuing new bonds.
At first glance, the plan sounds plausible, and unlike the 14th Amendment and Necessity of State approaches, the minting of platinum coins is specifically authorized by statute (Section 5112 of Title 31 of the United States Code). Backers of the idea include no less than Nobel Prize-winning economist Paul Krugman and Washington Post/MSNBC pundit Ezra Klein, who concede the wacky nature of the proposal but have promoted it nonetheless as an alternative to the right’s debt-ceiling brinksmanship. The idea also has been endorsed by Philip Diehl, who served during the Clinton administration as the 35th director of the United States Mint.
Others have denounced the plan. CNBC.com senior editor John Carney has argued that the coin strategy is at root a form of borrowing that fails to overcome the objection that only Congress can increase the debt limit on the government’s credit card. Former Mint Director Edmund Moy, who worked under both George W. Bush and Obama, has termed the idea “a desperate gimmick of questionable legality.”
Whether or not Obama watches “The Simpsons” is unclear, but late last week the administration announced that it wasn’t buying the platinum option either. Short of a sudden change in direction then, there will be no avoiding a bone-bruising political confrontation with Republicans over the debt ceiling and the nation’s economic future. Like it or not, that confrontation is upon us.
Obama, for his part, has declared he won’t back down from the fight. The role of the progressive left is to insist he keeps that promise.
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