Today I saw an attention-grabbing article about the debt ceiling, it talked about various options that the President has if the debt talks in Congress fail. The one option that really caught my eye was the idea of creating some trillion dollar coins. The theory behind the idea is that while the treasury is limited on the amount of cash it can print there is no limit on the amount of coins it can press (at least according to the author of the article who I assume knows what they are talking about). So if this is true then the President can have a few trillion dollar coins made, then deposited into the Federal Reserve and use the proceeds from those coins to pay the bills. Now this theory interests me for two major reasons. The first being, a trillion dollar coin would be pretty cool, I have always enjoyed obscure coins and paper currency and what would be more obscure than a coin that was one of two or three.
The second reason why this theory interests me is because of the fact that it may get something done about the whole debt situation. This assumes that the idea is both possible and legal, which from what the article seemed to say, is true (though it did admit that there may be legal issues that they were unaware of). If the President were to make an order like this congress may feel (rightfully so) that the President is sidestepping them and taking power from their branch of the government. This may encourage them to work together if only to prevent something like this from happing in the future. They may just get together and create a reasonable way to handle the debt situation or a method to address future debt and debt ceiling problems. On the other hand, congress may just sit on their butts and do nothing, which is what I would expect them t do given the current political climate. Either way, the concept of a trillion dollar coin is cool; I only hope that the face that they put on it is Warren G. Harding.
The idea I found intriguing, which at least on the surface seems to have fewer legal questions, would be to invoke the 14th ammendment. One of its provisions explicitly states that the government's debt "shall not be questioned," ergo, if failing to raise the debt ceiling would cause undue danger of default, then Obama could raise it by executive order. He has already said he will not (in response to House Democrats suggesting he do so if I recall correctly), but given that a national default (or a downgrade from Moody's) by most accounts would be pretty disastrous for the economy, one could argue it is his duty as President, in the interest of the nation. Of course Republicans wouldn't like it, but even if it went to the courts, at least it would buy some more time for Congress to collectively get their acts together (the Republicans to be more reasonable, the Democrats to actually put forward a plan instead of just bitching about the Republicans' plans), especially since no sane judge would suspend the order during the court proceedings.
ReplyDeleteIts a decent solution to a silly problem. The main thing being that somebody has to do something to avert our self implosion. It *is* constitutionally mandated that our debt be beyond question and if the legislature is unwilling or unable to compromise then I see no reason why the executive can't step up to protect the country and fulfill the mandate of the constitution.
ReplyDeleteAs for the options he would have in such a circumstance, the two mentioned are both preferable to a default as they would avert an immediate crisis. That isn't to say that they are ideal. Minting a couple trillion isn't exactly the type of thing that credit agencies are looking for as a sign of solidfootedness(but it does help us further inflate away our debt!). Likewise the political circus that would result from a presidential order ignoring the limit would act as an additional confirmation of our ineffective government to world markets. Instead of focusing on coming to a sustainable solution, we could find our country locked in a silly impeachment trial all while the markets and rating agencies take note and flight.