Debt Ceiling

Will the White House Kill 'Platinum Trillion-Dollar Coin' Talk?


Platinum bars on display in Tokyo

Photograph by Tomohiro Ohsumi/Bloomberg

Platinum bars on display in Tokyo

Updates to say no statement was made at press briefing.

The White House has remained silent so far on the subject of the miraculous, debt-ceiling-evading, trillion-dollar platinum commemorative coin. But that’s because no one has asked. This could change today, if someone in the White House press pool finally pops the question.

The best bet is that the White House will spoil the blogosphere’s fun by saying it has no intention of having Treasury issue a coin and “sell” it to the Federal Reserve as a way to raise money and avoid hitting the debt ceiling. That would track what happened in 2011, when Treasury Secretary Timothy Geithner denied any intention of using the Fourteenth Amendment to avoid the debt ceiling.

(Update: No one asked about the coin at the press briefing. Treasury Dept. spokesman Matthew Anderson later declined to comment.)

In a way, an official denial from the West Wing would be a shame, because the online frothing and fuming over the trillion-dollar platinum coin has been great fun. Washington will be drearier if pundits and bloggers are forced to go back to arguing over more prosaic matters like the long-term entitlements crisis.

What has juiced the debate is that there really does seem to be a loophole in the law that might theoretically allow Treasury to fund itself in a way that would not count against the debt ceiling. The loophole is large enough that Representative Greg Walden (R-Ore.) has vowed to plug it with legislation banning such a move. The coin gambit wouldn’t necessarily cause short-term economic damage, either, since it wouldn’t inflate the money supply if it didn’t result in more lending and spending in the economy. The downside? Most likely a constitutional crisis.

Josh Barro, the lead writer for Bloomberg’s Ticker blog, insists that Geithner should be prepared to mint the coin and call the Republicans’ bluff on the debt ceiling. New York Times columnist Paul Krugman even suggested putting the face of House Speaker John Boehner on the coin, “Because without him and his colleagues, this wouldn’t be necessary.” But over at Reuters, blogger Felix Salmon says: “As any poker player knows, when you’re up against a very stupid opponent, you should never try to bluff.”

Pure comic relief.

Coy_190
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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