The left must think Treasury Secretary Tim Geithner is a magician, since they think funds to evade the debt ceiling can be conjured up in the form of a platinum coin.
The left-wing blogosphere has been promoting a loony idea to prevent the GOP from being able to cut spending in debt ceiling negotiations. The idea has gained traction with a Bloomberg News contributor and well-known liberal economist Paul Krugman, and being heavily promoted by sites like Huffington Post. So many people are talking about it that it has a twitter hashtag: #mintthecoin.
The entire idea, which actually dates back to the debt ceiling fight of 2011, is that there is an “obscure provision” that would allow the Treasury Secretary to mint platinum coins. So the left has gone overboard arguing that he create a $1 trillion coin to deposit with the Fed and diffuse the entire debt ceiling fight, in spite of arguments that it is unconstitutional and that the law was specifically about creating coins for collectors. At least one proponent, Joe Firestone who blogs at lefty sites FireDogLake and DailyKos upped the ante urging a $30 trillion or $60 trillion coin be created.
The Huffington Post has pushed the idea over and over and were at it again on Jan. 7. That afternoon, Nobel prize-winning economist Paul Krugman was in the top story on the homepage, “KRUGMAN URGES: MINT THE COIN” blared the headline across the top of HuffPo. Beneath the enormous picture of Krugman it said “‘The Decision Should Be Obvious’ ... GOP Congressman Seeks to Ban Platinum Option, Implicitly Admits Coin is Legal... Why Opponents Are Wrong.” On Jan. 9, HuffPo gleefully reported that the White House “Doesn’t Completely Rule It Out” after the press secretary dodged a question on the subject.
There is so much noise coming from the left on this that CNN, Fox News and MSNBC have all mentioned it in recent days. Other outlets from The Washington Post, to Time magazine’s Swampland blog, to The Economist have also covered the campaign. Politico mentioned it in conjunction with the other solution some are promoting, which is that Obama should invoke the 14th amendment to sidestep the fight. The article acknowledged that Obama has already said he will not negotiate with the GOP.
One particular CNN report claimed “It sounds crazy but some economists, some legal scholars say it is legal and could be done.” At least CNN’s reporter Brian Todd included a voice of opposition, not only a proponent. He spoke with WSJ columnist Stephen Moore who said, “I think this is waving pixie dust over the debt and pretending the debt is going to go away by one of these Washington gimmicks.” Todd also poked a bit of fun at the idea by showing a video clip from “Austin Powers.”
In spite of #mintthecoin fans like Krugman, Josh Barro of Bloomberg, and Joe Weisenthal of Business Insider, even some on the left see its flaws. One Atlantic writer called it a “conspiracy theory,” while a UK Guardian writer compared it to a “mad scientist’s plot.”
The Democracy in America blog from The Economist called the notion a “distraction” from the real fiscal issues facing the U.S. and said it “flirts with the heady unilateral decisiveness of fascism.” Ultimately they concluded it would be better if commentators “would rein in its id, stop its idle chatter about exotic, coin-based, presidential monetary policy, and begin seriously to consider the more probable but less glittering eventuality of a Greek-style default.”
Kevin Drum, of far-left magazine Mother Jones, wrote that it was “horrible, lawless policy” and that the law being cited as support for a $1 trillion platinum coin was actually just a technical correction written to clarify what sort of coins the Treasury can make for coin collectors. “Courts are expected to rule based on the most sensible interpretation of a law, not its most tortured possible constructions,” Drum criticized.
Conservatives and business experts panned the idea. CNBC’s Net Net writer John Carney argued that the #mintthecoin plan was “unconstitutional.” AEI’s James Pethokoukis talked to a bank analyst with Washington Research Group. The analyst told him if the Treasury minted a $1 trillion coin “We [would] see chaos if the market has to confront Treasuries where the debt is backed by Congress and those where it is not backed by Congress. And the $1 trillion coin would expand the money supply by a considerable amount, which could spark serious inflation.”
Ralph Benko, editor of the Lehrman Institute's monetary policy website, recently attacked the platinum coin proposal, noting its violation of a monetary principle first established by the famed astronomer Copernicus. He also pointed to the hyper-inflation experienced recently in Zimbabwe, when its government violated the same principle.
In spite of left-wing opposition to spending cuts, there is a huge spending problem in the U.S. The editorial board of Investor’s Business Daily reminded readers of that very fact on Jan. 7, writing that Obama’s debt commission “made clear that spending is the driving force behind the nation’s debt crisis.” The final report of the commission said, “We should cut all excess spending -- including defense, domestic programs, entitlement spending, and spending in the tax code.”