No, you don’t need to clean out your ears or wipe your eyes in disbelief — the government is really considering minting a trillion-dollar coin in order to give it enough money to pay off its debts. It might sound ridiculous and like something that just shouldn’t or couldn’t be done, but it’s a very real possibility if Congress can’t agree to raise the debt ceiling.
Here’s the deal — if Congress doesn’t raise the debt ceiling, the U.S. government won’t legally be allowed to borrow any more to pay off its debts. If it can’t pay off its debts, it goes into default and just like with an individual person, the nation going into default is a very bad thing. Think economy in a tailspin, interest rates skyrocketing, all that very unfun stuff.
A trillion-dollar coin is allowable under a law dealing with commemorative coins, which says that the Treasury can strike any coin of any denomination, shape or size in platinum. The Treasury would mint the thing, send it over to the Federal Reserve and it would be entered into the system — “One trillion dollars, thanks!” — and boom, there’s money to pay off the government’s obligations.
This is all because of a law that says the Treasury secretary may “ mint and issue platinum coins in such quantity and of such variety as the secretary determines to be appropriate.” That law was overseen by Philip Diehl, the former Mint director and Treasury chief of staff who explained in an email to Gawker how and why this is a very real possibility, and totally legal.
He says, in part:
In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years. The Secretary’s authority is derived from an Act of Congress (in fact, a GOP Congress) under power expressly granted to Congress in the Constitution (Article 1, Section 8).
After the debts are paid, the coin would go back to the Treasury where the accounting would be reversed and it would be melted down, never to see the light of day again or be circulated in any way. No super secret cat burglars rappelling down from ceilings to snatch it, either.
But will this actually happen? Some proponents think it should, including New York Representative Jerrod Nadler, a Democrat Nobel laureate Paul Krugman. But Republicans don’t so much like the idea, and as such, Representative Greg Walden, an Oregon Republican says he’ll introduce legislation to block any such move, notes Bloomberg News.
The Republicans in Congress are of the view that they want spending cut before they agree to any raising of the debt ceiling, but President Obama says he’s not going to budge. Straits are already dire, as Treasury Secretary Timothy Geithner had to take “extraordinary measures” on Dec. 31 when the government was just $25 million below the debt limit.
Whatever is to be done needs to be accomplished soon, as the Treasury will officially run dry of funds to pay its bills between Feb. 15 and March 1.
The short answer is yes, there really could be a trillion-dollar coin. But we’re guessing there will be a lot more political wrangling and back and forth in Congress to explore every other option before this fantastical coin becomes a real thing.