Last year, Paul Krugman was calling the $1 trillion coin “an accounting gimmick” that “wouldn’t even fool anyone”, now he’s all in on the illegal power grab with a New York Times column headlined, “Biden Should Ignore the Debt Limit and Mint a $1 Trillion Coin”.
That only took a little over a year.
Krugman, who has clearly given the $1 trillion coin all the thought that he has historically bestowed on his columns, “The fact that Republicans routinely say such nonsense is why the Biden administration should mint a $1 trillion platinum coin or declare that the Constitution gives it the right to issue whatever debt is needed to fund the government — or use some other trick I haven’t thought of to ignore the looming crisis.”
Or you know, whatever. As long as the coin owns the cons.
Obama had discussed this particular unconstitutional power grab, but chose not to go for it. There’s a good reason for that. It’s an arguably impeachable offense and the origin of this idea was… an internet comment.
Back in the summer of 2011, as House Republicans threatened to force us to default on our obligations, a commenter on Cullen Roche’s blog, Pragmatic Capitalism, suggested an inventive way around the debt ceiling: a trillion-dollar coin.
That’s right. Krugman is getting his brilliant economic proposals from an internet comment.
Whether or not Biden goes for this, the $1 trillion coin is a dumb loophole that Congress needs to close.
The story starts in 1995, when Rep. Michael Castle, then the Republican at-large representative for Delaware, took over as head of the House Financial Services subcommittee on domestic and international monetary policy. Issues of coinage were part of that subcommittee’s jurisdiction, and so Castle — who tells me that he personally has never collected coins or previously hadn’t had much interest in coin issues — started working with coin collectors and others to draft legislation on the topic.
Castle’s biggest accomplishment in the role was the 50-state quarter program, which involved issuing 50 differently designed quarters in the order the states were admitted to the Union (it isn’t a coincidence that Castle’s home state of Delaware was the first admitted). But he also drafted a bill, the Commemorative Coin Authorization and Reform Act of 1995, that included this provision:
Notwithstanding any other provision of law, the Secretary of the Treasury may mint and issue platinum coins in such quantity and of such variety as the Secretary determines to be appropriate.
The logic, Castle tells me, was to enable the Treasury to put out collectable platinum coins of a variety of sizes. At the time, collectors had complained that the smallest platinum coins available were too expensive, a problem the bill was supposed to enable the Treasury to correct. “The investment community wanted flexibility to make fractional coins,” Castle explains. “People couldn’t afford the $600 investment, so they wanted the flexibility to put in smaller coinage so that people could collect them.”
At no point in time was this law meant to authorize a $1 trillion coin. But then again the Constitution wasn’t meant to protect the right to kill babies and sex wasn’t meant to refer to men wearing dresses. In the case of the coin, the loophole is fairly easy to close by adding a specification for an upper limit to the coins. It’s common sense so that’s exactly why it won’t happen. At least until some administration actually goes ahead and makes the internet comment real.