This week, Philip Diehl, the former director of the U.S. Democratic leaders have rejected that proposal, saying that it is too time consuming and could bring the country dangerously close to the point of default.Ĭoncern that the country might inadvertently lurch into default because of an accident of timing has made the trillion-dollar coin idea more appealing to some because, by all accounts, it could be executed very quickly. Republicans are demanding that Democrats use a complicated procedure known as “budget reconciliation” to vote on the debt limit. The fight is over how it ought to be done. Leaders of both parties insist that the government must be allowed to borrow the money it needs to pay its bills. There is no debate over whether or not the debt limit should be raised.
While it may sound fantastical, the fact that the trillion-dollar coin is part of the conversation in Washington reflects just how fraught the fight over the debt limit, a cap on how much the Treasury can borrow, has become. The controversial move relies on the statutory power of the Treasury Secretary to authorize the minting of platinum coins “in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.” Then, when necessary, the Treasury would draw funds from the account to pay the nation’s bills. The platinum coin would then be transported to the Federal Reserve, the nation’s central bank, and placed on deposit in the Treasury Department’s account there. Mint to create a single coin in the denomination of $1 trillion.
Treasury Secretary Janet Yellen would order the U.S. The plan, according to its proponents, is simple. When that happens, one unconventional option that has gained support in recent weeks is likely to be back in the mix: minting a $1 trillion platinum coin to provide the Treasury with the funds it needs to pay the country’s bills in the coming months. That means that the Biden administration and its Democratic congressional allies will be back in crisis mode, looking for ways to avoid a catastrophic default on the country’s financial obligations. It would also make it likely that by mid-November lawmakers will be dug in on the same battle lines.
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The measure would do nothing to bridge the serious divide between Democrats and Republicans over how to avoid a default on the country’s debts over the longer term. After bringing the United States to within two weeks of a potential debt default, Congress late Wednesday was on the verge of a deal that would avert the crisis through November by passing a small increase of the limit on how much the federal government is allowed to borrow.
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