So, have you heard the one about the trillion-dollar coin? It may sound like a joke. But if we aren't ready to mint that coin or take some equivalent action, the joke will be on us — and a very sick joke it will be, too.
Let's talk for a minute about the vile absurdity of the debt-ceiling confrontation.
Under the Constitution, fiscal decisions rest with Congress, which passes laws specifying tax rates and establishing spending programs. If the revenue brought in by those legally established tax rates falls short of the costs of those legally established programs, the Treasury Department normally borrows the difference.
Lately, revenue has fallen far short of spending, mainly because of the depressed state of the economy. If you don't like this, there's a simple remedy: Demand that Congress raise taxes or cut back on spending. And if you're frustrated by Congress' failure to act, well, democracy means that you can't always get what you want.
Where does the debt ceiling fit into all this? Actually, it doesn't. Since Congress already determines revenue and spending, and hence the amount the Treasury needs to borrow, we shouldn't need another vote empowering that borrowing. But for historical reasons any increase in federal debt must be approved by yet another vote. And now Republicans in the House are threatening to deny that approval unless President Barack Obama makes major policy concessions.
It's crucial to understand three things about this situation. First, raising the debt ceiling wouldn't grant the president any new powers; every dollar he spent would still have to be approved by Congress. Second, if the debt ceiling isn't raised, the president will be forced to break the law, one way or another; either he borrows funds in defiance of Congress, or he fails to spend money Congress has told him to spend.
Finally, just consider the vileness of that GOP threat. If we were to hit the debt ceiling, the government would end up defaulting on many of its obligations. This would have disastrous effects on financial markets, the economy and our standing in the world. Yet Republicans are threatening to trigger this disaster unless they get spending cuts that they weren't able to enact through normal, constitutional means.
Republicans go wild at this analogy, but it's unavoidable. This is exactly like someone walking into a crowded room, announcing that he has a bomb strapped to his chest and threatening to set that bomb off unless his demands are met.
Which brings us to the coin.
As it happens, an obscure legal clause grants the secretary of the Treasury the right to mint and issue platinum coins in any quantity or denomination he chooses. Such coins were, of course, intended to be collectors' items, struck to commemorate special occasions. But the law is the law — and it offers a simple if strange way out of the crisis.