Saturday, January 5, 2013

Trillion Dollar Coin, Making The Debt Ceiling Vanish

A trial balloon is being floated by some liberals willing to do "anything" in order to avoid hitting the debt ceiling. A couple of articles have appeared reporting that both Senate Majority Harry Reid and House Minority Leader Nancy Pelosi have signaled President Obama that they will support him if he decides to remain true to his promise not to negotiate with Republicans over the debt-ceiling. Reid  has privately told some Democrats, including President Obama, that if the administration used its constitutional and executive authority to continue paying its debts in the face of House Republican opposition, he would support the approach.

Last month, White House spokesman Jay Carney told reporters that "[t]his administration does not believe that the 14th Amendment gives the president the power to ignore the debt ceiling -- period." The amendment states, “The validity of the public debt of the United States…shall not be questioned.” Some suggest that the simplest escape route out of the debt ceiling impasse is for the president to direct the Treasury to find a legal way to pay its debts, they say the Treasury has a variety of options. One gaining particular attention relies on a law that allows the Treasury to mint a coin worth enough to cover debts for some time and deposit it with the Federal Reserve. Those funds could then be used legally to pay debts. 

If the president went the route of the so-called "platinum coin," and used the cover of the 14th Amendment to tell Congress that the constitution gives him no choice but to find all legal ways to honor the "validity of the public debt." The funds would not be used for spending that isn't authorized and appropriated by Congress, but only to pay debts. The president, therefore, would not be 'technically" ignoring the debt ceiling, because there would be no new debt subject to the limit. Nancy Pelosi said Friday that she would raise the debt limit unilaterally “in a second” if she were president of the United States. With Pelosi and other Democrats suggesting that the president could bypass Congress and unilaterally raise the debt ceiling by invoking this amendment we would be taking a step down a very slippery slope. This would be a major step towards an "Imperial" presidency and an aggress overreach of executive powers.

A Follow Up Note; It appears the trial balloon floats, today Jan 6th on Face The Nation Pelosi again repeated her statement citing the 14th amendment. Now others are already lining up behind this bad idea, when one branch of our government usurps another, "Houston, we have a Problem", it is game on!.

1 comment:

  1. Hi Bruce, just stopping by. I'd let you know that I like this blog, but I'd wish it was more geared towards economics and less so on the blow-by-blow politics, even if the economics/politics overlap is there and needs to be acknowledged.