If not the Coin, then what?

Though I somewhat playfully supported the Platinum Coin fix* to the debt-ceiling problem during the last crisis – as the perfect non-solution to a complete non-problem – I’m sympathetic to Kevin Drum’s impatience with the idea.

The Coin may be within the text of the law, but it’s hardly within its spirit, and the national credit of the United States should not depend on legal shenanigans. Much, much better to have the Republicans in Congress grow up and authorize the President to issue debt to pay the bills already incurred, and still being incurred, by Acts of Congress.

Politically, it looks to me as if the Republicans know they have a losing hand – their Wall Street paymasters won’t hold still for default – and are prepared to throw it in, now that the President has said he won’t ransom the hostage. That’s another good reason not to give them an out.

Still, there’s a real question here. The President’s oath of office commits him to “take care that the laws be faithfully executed.” The law commands the President to expend appropriated funds, and gives him no authority either not to expend them or to withhold payment when the bills come in. (Not paying the debt when due is not only a horrible, terrible, awful, no-good idea, it might violate the 14th Amendment to boot.) But the debt ceiling forbids the President to borrow the money required to obey the command that he spend it.

So: if we imagine a situation where the Congress doesn’t lift the debt limit, and the President has to choose between the Coin and default, would default really be the better option? If default is preferred, on what principle should the President choose which bills to pay and which to refuse to pay? And by what authority would he make that choice? If you’re sworn to execute the laws, and your choice is between the Coin and not executing some of the laws, aren’t you pretty much stuck with the Coin?

* For those who haven’t been following, the idea is to take existing legal authority to mint platinum coins in any denomination by the horns and mint a trillion-dollar coin. You then deposit that coin in the Treasury’s account at the Fed, reducing the national debt by $1T. The authority to mint gold bullion coins – which don’t count against the statutory limit on paper currency – requires that they only be issued at their intrinsic value, but somehow that clause got left out of the legislation extending coinage authority to platinum.

[Cross-posted at The Reality-based Community]

Mark Kleiman

Mark Kleiman is a professor of public policy at the New York University Marron Institute.