Associated Press
Rep. Greg Walden (R-Ore.)
We talked last week about efforts to resolve the latest debt-ceiling crisis with a fanciful gimmick: the White House can exploit an obscure law, order the Treasury to mint some $1 trillion platinum coins, and deposit them at the Federal Reserve. Voila, a silly solution to a silly problem with not-at-all silly consequences.
As the platinum-coin loophole continues to generate chatter on the left -- Paul Krugman lent it some credence yesterday -- a Republican congressman is concerned enough about this that he's seeking a legislative remedy to close the loophole (via Matthew O'Brien).
U.S. Rep. Greg Walden (R-Ore.) today announced plans to introduce a bill to stop a proposal to mint high-value platinum coins to pay the federal government's bills. [...]
"This scheme to mint trillion dollar platinum coins is absurd and dangerous, and would be laughable if the proponents weren't so serious about it as a solution. I'm introducing a bill to stop it in its tracks," Rep. Walden said.... "My bill will take the coin scheme off the table by disallowing the Treasury to mint platinum coins as a way to pay down the debt."
Of course, Walden's proposal comes with an unintended subtext. As Joe Weisenthal explained, "[T]he key thing here is that the idea is now legitimized, as a GOP congressman implicitly acknowledges that the coin is currently legal."
In other words, if there was no loophole, there'd be no reason to close it.
That said, I'm still skeptical about making the transition from "fun little polisci thought experiment" to "something the administration needs to seriously consider in the next few weeks."
Josh Barro has become one of the leading proponents of the idea, and yesterday, he responded to the most common concerns raised by detractors. He makes a fairly compelling case.
But I find myself imagining the remarks President Obama would have to deliver from the White House next month:
Dear International Investors and Global Financial System,
Some of you may be worried about the United States and our willingness to pay our bills. I'm afraid some of the reports you've seen are true: much of our legislative branch of government has been overcome with madness, and there's not much I can do about that.
But there's no cause for alarm. I've decided to exploit an obscure, untested, legally-dubious loophole that will allow me to protect the full faith and credit of the nation, even though Congress won't like it, with a gimmick that everyone agrees is transparently silly.
Regardless, if it's all the same to you, I'd really appreciate it if you continued to look at the United States as a stable, global superpower, which deserves to be taken seriously, and which is totally worthy of your investment. In fact, if you're willing to overlook the inconvenient fact that our House of Representatives is stark raving mad, you'll see that there's no reason to stop loaning us money.
Have a nice day and please stop laughing at us.
I've seen many point out that ridiculous crises sometimes require ridiculous solutions, and I'm not unsympathetic to the point. On the contrary, I don't blame the left for coming up with off-the-wall remedies to the problem; I blame congressional Republicans for creating the problem and threatening to hurt the country on purpose unless they get their way.
Indeed, ideally, I'd like to see Democrats offer folks like Greg Walden a deal: Dems will agree to close the platinum-coin loophole if the GOP agrees to close the debt-ceiling loophole, transferring authority for raising the debt limit from Congress to the White House.
It's the kind of "grand bargain" that would do the nation a lot of good.
Leave a Comment:
Just veto his loophole killer, duh.
The stupidity of the coverage is much more significant than that. Commentators have refused to examine the simple idea that the result of default is that renting money becomes more profitable.
Consider this. If you were a member of the 1% and sitting on 2 trillion dollars of cash, renting your money is not especially profitable when interest rates are low.
GOP representatives are threatening to prevent the executive branch from paying Congress's bills. A default would result in higher interest rates on US debt, and therefore the profits to anyone with cash to rent. To a naive observer, the GOP is the party of business, and it is unfathomable why they, who enjoy heavy Wall Street backing would flirt with default- the height of fiscal irresponsibility.
Business is about winners and losers. Wall Street players whose existence revolves around short term bottom lines understand that the more government is sloppy with money, the more money Wall Street can vacuum up.
Genius move. 100s of billions in bottom line profit. This is where American ingenuity is getting channeled.
Finance now accounts for over 20% of US corporate profits, and this means that anything Obama does to reform the financial sector has a severe impact on the recovery.
The energy sector is 23% of GDP. Anything Obama does to reform the Energy sector has a severe impact on the economy.
It's Checkmate.
And it has been that way since it was clear Obama would win. From now on, when Big Oil and Wall Street want to checkmate progressives, here's the genius play:
Crash the economy.
Besides decisively blocking reform, they have found it very, very profitable.
John, thank you for pointing this out. Since the Federal Reserve won't do the Republican's bidding and raise interest rates, they are viewing crashing the economy as an alternative. Brilliant! (And never mind what it does to the rest of us.)
I actually operate under the belief that raising the interest rates would be good. The fed operates under the belief that raising the interest rates would harm the housing and lending markets, but we're not seeing lending expand and we're not seeing housing expand despite the interest rates having been at record lows for over 10 years now. It seems to me that if you were to increase the interest rate to something modest- like 6%- you'd see the elderly who are either retired or going to retire (the Baby Boomers) have an influx in the money that they can spend. This would, at the very least, get credit flowing within the economy again instead of it being concentrated within the top percent of the country.
But, none the less, it's the concentration of credit within the top 2% of our economy that is causing their profits to go through the roof (intangible for intangible trades) while everyone else who benefits from something substantial- be it homes, actual physical cash, or bridges, highways, etc.- is getting screwed at their expense.
Here's a better announcement for the President to make: "I have today arrested the House Republicans on a charge of conspiring against the United States and committing treason. They will all be transported to Guantanamo Bay for their own protection."
Oh well, one can dream....
Or get a Dem to put an amendment in this bill eliminating the debt ceiling,, the debt ceiling being a silly solution to a non-existent problem.
Purrrrfect!
This would be funny if it were not for the nut cases in the House being bent on destroying the American economic system
Any shiny object will distract them from authentic work, even platinum coins.
It's the kind of "grand bargain" that would do the nation a lot of good.
Don't make me laugh .
They have proved through their actions time and time again that the have absolutely no interest in doing anything that would benefit the nation . Every action is a political move to either stop Obama or freeze government.
The only thing they understand is a brick upside the head
"This scheme to mint trillion dollar platinum coins is absurd and dangerous, and would be laughable..."
If the GOTP weren't so delusional, obstructionist and a bunch of pathological liars! There that's better...
You play poker with the hand dealt to you, at the table you are sitting. In normal times this idea gets no ink, but obviously we are not in normal times. The USA needs an out, unfortunately. Way too many bad actors...
We pay money for this kind of thinking?
It could be worse. Think what kind of mischief they'd be getting into if they didn't have distractions like this!
Yeah, pretty amazing.
http://www.dailykos.com/story/2013/01/08/1177211/-Co-author-of-platinum-coin-law-weighs-in-on-trillion-dollar-coin
"Philip Diel ran the U.S. Mint from 1994 until 2000, and wasn't just the author of the 50-state quarters, but was also the co-author of the law that authorizes the Mint to issue commemorative coins—the same law that would authorize the Trillion Dollar Coin being discussed as a way to bypass Republican opposition to raising the debt limit."
Steve Benen, thank you for illustrating the downside risk of taking this extraordinary step to circumvent the right-wingers' obstructionist tactics. Of course it's tempting to "beat them at their own game," but the spectacle it would create on the world stage would be incredibly damaging to the United States for years to come. Maybe forever.
It seems to me that their power comes entirely from acting as a bloc. Create a Wall of Shame to show which members of Congress are willing to besmirch the creditworthiness of this country and hound each of them individually into being sensible.
I say put Reagan's face on the coin. Not only was he responsible for "trillion" and "debt" first being used in a sentence, what Republican could take action to outlaw a Reagan coin?
Wouldn't it be nice if lying in public was for a congressperson an impeachable offense?
At least we have a bargaining chip to use against their bargaining chip. We should keep threatening to use it until they stop threatening to destroy the world economy by refusing to raise the debt limit. If they want to close this loop hole, we should agree only if they repeal the debt limit loop hole. Two can play that game as well as one.
The only time in our history that the national debt got paid off was under Andrew Jackson. He did it by selling off a lot of public land. The result was a depression. I do not recommend selling our public lands, but we could sell some government assets rather than default on our debts.
I heard a really interesting show once on NPR that explained how the reason for declaring "nationhood" for a group of people was, first and foremost, for the purpose of borrowing money. The upshot is that borrowing money to be used for providing for the common good (infrastructure projects) and defending its borders ought to be seen as a hallmark of fiscal soundness and power, rather than an inability to handle money responsibly as it is now represented.
I'll search around and see if I can find it, then post a link.
The real solution to the problem is to convince the business community and other supporters of the Republicans in congress that playing with the full faith and credit of the U.S. is very bad for businesses of all kinds so that they tell their representatives in Congress to try some other tactic. If the Republicans want to cut the spending THEY should recommend what they want to cut. Just saying in general terms that they want to cut entitlements does not fill the bill. They have to be specific.
Sounds like good sound scientific finance to me. Guideline: I can't afford to pay my mortgage, car payments, school loans and kids' tuition so I am going to borrow 35% more than I earn so I can have what I want. This way I don't have to face the reality of the bills coming due and my not making enough money to say no to the wife and kids. Comment: It isn't just the Republicans or the members of the house that are nuts, the whole world has gone crazy. What will happen when the first lender says "pay up"?
Respectfully, Walker, the talking point that we should be running our government like a household budget has been discussed and debunked in many venues: here, this, our Steve, and this one...I included several links for you to select one you feel is trustworthy.
Then perhaps this empty sentiment can stop being repeated by one more person.
No Walker. Wrong analogy. You've already borrowed the money and spent it. This is your VISA bill come due. You're threatening to become a deadbeat. PAY YOUR BILLS!
You know, the Republicans don't have to rely on the President to set the national budget. Instead the Republican house spends a lot of time passing "budgets" that are little more than ideological statements knowing they will die in the Senate. If they would pass one the Senate could approve, I suspect the President would sign it. That budget could have a lot of spending cuts, especially defense cuts.
The House is at fault for not working to pass a budget the Senate and President can approve.
By the way, that Walden is taking the coin idea seriously provides real cover for the President. If he uses it, nobody can say it was an illegal power grab.
I just think we should make it a ten trillion dollar coin, so we could jump into a surplus ASAP. I mean, why putter around when we can clear the decks all at once?
The GOP is just working for the bankers who DO want interest rates on US debt to rise.
So "Our Greg" Walden comea out of the closet, drinking deeply from the Kool-Aid Cup.
From our "Why are we not surprised?" file via TPM's Livewire:
On the heels of an historically unpopular Congress, Democratic-leaning Public Policy Polling found a sardonic way to illustrate just how low the public thinks of the governing body in a survey released Tuesday.
Among several items and individuals tested, the automated poll found that American voters have a higher opinion of root canals, Canadian rock band Nickelback, head lice, colonoscopies, Genghis Khan, France, Donald Trump and cockroaches than they do of Congress.
On the other hand, Congress, which registered a paltry favorability rating of 9 percent in the survey, is still more popular than telemarketers, ebola, North Korea, Lindsey Lohan, communism, meth labs and the Kardashian family.
So "Our Greg" Walden comes out of the closet drinking deeply from the Kool-Aid Cup.
From our "Why are we not surprised?" file via TPM's Livewire:
"On the heels of an historically unpopular Congress, Democratic-leaning Public Policy Polling found a sardonic way to illustrate just how low the public thinks of the governing body in a survey released Tuesday.
Among several items and individuals tested, the automated poll found that American voters have a higher opinion of root canals, Canadian rock band Nickelback, head lice, colonoscopies, Genghis Khan, France, Donald Trump and cockroaches than they do of Congress.
On the other hand, Congress, which registered a paltry favorability rating of 9 percent in the survey, is still more popular than telemarketers, ebola, North Korea, Lindsey Lohan, communism, meth labs and the Kardashian family."
Russell,
At least this time Rep. Walden is not chairing a committee meeting bashing peer-reviewed research published in the journal Science.
So, while taking a firm stand on the trillion dollar commemorative coin is a bit clownish, it is actually a big step up for Greg Walden. At least this time he is not pandering to his timber industry donors by abusing subpoena power to drag a graduate student before his committee for a grilling worthy of inclusion in Alice-in-Wonderland.
(For those thinking I am being harsh, consider the baby-faced graduate student had more peer-reviewed publications under his belt than the grizzled members of Walden's committee combined, and that the work had been reviewed and deemed accurate by the editors of Science who volunteered to testify but were barred by the committee chair.)
For anyone wondering how such a sterling example of intellectual integrity holds a House seat in Oregon, please realize the Honorable Mr. Walden is the predictable consequence of gerrymandering.
Oregon has five House districts and a Democratic majorities in the state houses and a democratic governor. According to the popular vote every two years, we should have two Democrats, two Republicans, and one seat that alternates, for we are a blue-tinged purple state.
Thanks to gerrymandering, we have four safe Democratic districts and one really safe Republican district. Since every appreciable concentration of wing-nuts in the state are purposefully included in Walden's district, as long as he satisfies their short attention spans he will win re-election.
On the bright side, his protege and assumed successor failed miserably in a resume padding run for a DA office in the last cycle, so at least the dynastic aspect of Walden's district is in doubt.
I think the Republicans are into bondage. They tie our hands with no tax increases and bind our eyes to cut social programs, then spank us with bills closing only ineffectual loopholes.
The coin in no more ridiculous than calling oneself a Tea Partyer, and that's exactly the beginning salvo in our current mess - our problems as a people began with the rise of the Tea Party and its obstinate relentlessness in prosecuting a war against our very government! -Kevo
I'd say that the $1 trillion coin is much less ridiculous.
'Fraid not, mein Freund. The TP didn't get rolling until quite a while after the Republican leadership in Congress got together to conspire to do everything possible to harm the United States (January 2009).
The coin is a perfect example of how Obama can make his life easier by engaging in some "outside of the box" thinking. It's the perfect way out of this crazy-Republican-generated fake problem.
Come on, Barack. As the Nike slogan says, Just Do It.
It's not that complicated. The Republicans will either agree to raise the debt ceiling or they won't. If they don't, Obama has to decide whether he's going to go ahead and keep paying the nation's debts anyway. If it comes to that, the platinum coin plus the 14th Amendment is enough of a fig leaf for me. If it doesn't the issue is moot.
There is now a website to "STOP THE ONE TRILLION DOLLAR OBAMA COIN!!!!!!11!!"
stopthecoin.com
Reductio ad absurdum, heavy on the -dum.
There is a certain pleasure in the idea of using a stupid idea to counteract another stupid idea. It appeals to one's sense of equilibrium and fairness.
The problem is that you can't beat a pendejo by being a pendejo. First, they have more experience at it and will outpendejo you. Then, what you've done is legitimize their behavior so they will just double down, and they can go lower than normal people are willing to go.
So what we will have to do is find a legitimate way that reasonable people will acknowledge as proper. Ignoring the repubs and just paying bills as they come up, debt limit or not, seems to me to be reasonable. Another thought is to save money by reducing the amount of federal funds going to those states represented by the pendejo class.