On the debt limit, Biden must learn to love the platinum coin

The United States is looking at another possible barrel to default on its debt. House Republicans, now effectively led by the most restive members of the Freedom Caucus, openly promise to take America’s full faith and credit hostage to extract massive concessions from President Joe Biden and his fellow Democrats.

The severe consequences of default are well documented. US debt is practically the foundation of the global financial system. If the rest of the world doubts his credibility, a major recession, if not a devastating financial crisis, is likely.

Without the coin, the president is breaking the law one way or another.

However, there is one aspect of the debt limit issue that has gotten little coverage: It would be as illegal to comply with the limit as it would be to ignore it. If the Republicans refuse to raise the debt ceiling, they will put the president in a quandary: demand that he spend, but prevent him from borrowing the necessary money. Biden will have no way out — unless he opts for the platinum coin loophole. Without the coin, the president is breaking the law one way or another. It is difficult to see why he chose the option that causes an economic crisis.

Let’s review the situation. Treasury Secretary Janet Yellen said the department will begin Thursday various accounting adjustments to ward off actually violating the debt ceiling, but the scams are expected to end as soon as June. Republicans haven’t agreed on a set of demands to ransom the global economy, but some hardliners have mentioned spending cuts of one dollar for every dollar of debt new, cutting spending to fiscal 2022 levels, and eliminating new funding for the IRS. and backtracking on abortion rights. Meanwhile, the House GOP is said to be working on a payment prioritization plan that would defund everything but interest payments on the national debt, Social Security, Medicare, veterans benefits and the military.

Essentially, they want Democrats to repeal all of their hard-won legislation from last year, or shut down what looks like a quarter of government — including “Medicaid, food safety inspections, border control and air traffic control,” according to The Washington Post — indefinitely. named. But any such measures would have to be passed by both Senate Democrats and Biden, both of whom have rejected any concessions whatsoever. Moreover, experts agree that prioritizing payments would be logistically impossible, given the sheer volume of payments the government makes each day.

On the other hand, during the lame duck session, Congress passed a $1.7 trillion spending bill that keeps the government funded through September, which Biden signed into law on December 29. This is the legal obligation: Congress has instructed the executive to run the government at specified spending levels through the end of the fiscal year, but now refuses to give it the borrowing power necessary to carry out its own instructions.

If the debt ceiling is reached, and the coin is minted, Biden must choose which legal violation to commit.

All of this is why the famous platinum coin is Biden’s most egregious legal defense option, as absurd as it may seem. Apparently, the 1997 Act gives the Secretary of the Treasury the ability to mint platinum coins any denomination, partly for the purpose of making a profit for the government by registering property. If Congress says the president should spend, he can’t borrow, however can Mint, the way is clear for those who cling to the law. Mint a trillion or two platinum coins, deposit them in the Federal Reserve, and problem solved. Economically, it would be almost identical to borrowing money, presumably at some point the cap could be raised and currency spending replaced by regular debt.

However, management attorneys seem to disagree. Yellen also said the currency is a “gimmick” that “threatens the independence of the Federal Reserve, and confuses monetary and fiscal policy.” This is a weak argument in context – it’s hard to see why a stunt that allegedly undermines the (extremely exaggerated) independence of the Federal Reserve would be worse than financial Armageddon.

But in any case, it is very strange that both the administration and almost all of the mainstream media should treat the debt limit as a strict legal hurdle – but not give the same treatment to the spending law. “Once the government has exhausted its extraordinary measures and run out of cash,” Alan Rapeport wrote in The New York Times, “it will be unable to issue new debt,” as if it were an actual physical mechanism that would forcibly block new borrowing. Nowhere does it say that Biden will also break the law if he does not spend as ordered.

If the debt ceiling is reached, and the coin is minted, Biden must choose which legal violation to commit. Surely any sane person would choose the option that does not cause massive and completely useless harm to the global economy. This option becomes even clearer when one considers the debt ceiling itself to be unconstitutional under the Fourteenth Amendment, which states that “the validity of the public debt of the United States, authorized by law…” shall not be questioned. President Abraham Lincoln also argued when Chief Justice Roger B. be violated? “

House Republicans, most of whom voted to overturn the 2020 election, are completely in thrall to the QAnon lunatics. They are ignorant and disguised enough to blow up the global economy either so they can blame Biden or simply enjoy the resulting chaos and destruction. The idea that it could be a bipartisan vote, as Senate Majority Leader Chuck Schumer, D-N.Y., advocated, is a wishful thinking. It is very likely that something like the platinum coin was needed to ward off the catastrophe. Biden must steel himself to break the debt ceiling forever using his own power.

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