As Congress barrels towards an Oct. 18 deadline to raise the debt ceiling, Republicans and Democrats remain at odds and at least two members of the latter party have floated an unlikely solution.
According to Business Insider, U.S. Rep. Jerrold Nadler of New York and U.S. Rep. Rashida Tlaib of Michigan have supported the idea of issuing a platinum coin worth $1 trillion to pay off the nation’s debt. Due to a legal loophole, the U.S. Treasury might be able to mint platinum coins of any denomination without congressional approval, explained the Associated Press.
According to the outlet, the loophole is part of a “quirky” law passed more than 20 years ago to make it easier for the government to mint commemorative coins for collectors. Generally, the Treasury is forbidden from printing money to cover government deficits, said the Tax Policy Center.
While the law appears to make the coin solution possible, it remains unprobeable, as Treasury Secretary Janet Yellen isn’t on board with the idea. She has called the coin proposal “really a gimmick,” the Associated Press said.
Rohan Grey, a Willamette University law professor and expert on fiscal policy, agrees that the coin is a gimmick. However, he doesn’t think that’s a bad thing or something that should necessarily keep Democrats from making it.
“The fact that [the coin] represents an accounting gimmick is a source of its strength, rather than a weakness,” Grey wrote in a 2020-21 study in the Kentucky Law Journal. “The idea of ‘fighting an accounting problem with an accounting solution’ is entirely coherent ... the debt ceiling itself can be viewed as one big, poorly designed accounting gimmick.”
Every time the U.S. reaches its debt limit, Congress must vote to raise it. Since the COVID-19 pandemic began the federal government has spent money to keep citizens afloat as they dealt with job loss, school closures, infection with the virus and other related hardships.
While Democrats have a narrow majority in both the Senate and House of Representatives, Republican Senate Minority Leader Mitch McConnell Tuesday rejected a request for a consent on the debt ceiling that would allow for a simple majority vote. Instead McConnell said Democrats should pass it through reconciliation as part of their $3.5 trillion spending package.
Senate Majority Leader Chuck Schumer said that process would take too long and is too risky. According to Yellen, waiting to act and allowing a default would delay Social Security payments and increase unemployment.
She encouraged Congress to address the issue immediately in a press release Wednesday. She did not mention the coin proposal. Democratic leadership overall has not embraced the idea, said Business Insider.
According to the Associated Press, allowing a president power to issue that much money could have consequences. Other issues, such as inflation, could result from paying off massive debts with a single coin.
Donald Marron, a tax policy expert who had led the Congressional Budget Office during part of the Bush administration, likened the idea to an “Austin Powers” movie or an episode of “The Simpsons” TV show.
Republicans, as one would imagine, are also not keen on the idea.
Although other ways around the debt ceiling agreement have been proposed, including temporarily selling all of the gold in Fort Knox, “the only path forward here is through Congress acting,” according to White House Press Secretary Jen Psaki.
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