It seems it’s the weekend of shooting down ridiculous ideas. First the White House says no to the Death Star, and then the Treasury says no to the $1 trillion coin. But one of those rejections was much more significant considering it got attention from top Washington pundits, political leaders, and a Nobel Prize-winning economist as it became a trending topic on Twitter with its own hashtag: #mintthecoin. Plus, Slate readers came up with some hilarious ideas when asked whose face should be on the coin.
Still, several Democrats had already rejected the idea of a coin on purely political grounds: For a nation so concerned with the deficit would there be a better symbol of out-of-control spending than a $1 trillion coin? Now the Treasury Department has said it won’t mint the coin to prevent a government default, effectively killing the idea for good.
“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,” Anthony Coley, a Treasury Department spokesman, said.
The mention of the Federal Reserve in the statement is important, points out the Washington Post’s Ezra Klein:
For the platinum coin idea to work, the Federal Reserve would have to treat it as a legal way for the Treasury Department to create currency. If they don’t believe it’s legal and would not credit the Treasury Department’s deposit, the platinum coin would be worthless.
The White House had earlier refused to reject the idea but made it clear Saturday it agrees with the Treasury, reports Politico. “The President and the American people won’t tolerate Congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy,” White House spokesman Jay Carney said in a statement. “Congress needs to do its job.”
The Economist explains there are at least three reasons why the idea was rejected:
The first is that it's probably not legal for the Federal Reserve to facilitate such a transaction for the purpose of financing the government. The second is that even if it were legal, it would seriously hurt the reputation and credibility of the Fed, fueling accusations it had subordinated monetary policy to fiscal policy. … The third and most important is that it lets Congress evade its responsibility for dealing with the debt ceiling.
The United States officially reached its borrowing limit on Dec. 31 and now the Treasury is using “extraordinary” measures to keep paying the country’s bills, points out Bloomberg. Those will likely run out sometime between mid-February and early March, although a debt default likely wouldn’t be imminent.
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Too bad it’s almost certainly unconstitutional.