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Paul Krugman
Wonking Out: Biden Should Ignore the Debt Limit and Mint a $1 Trillion Coin
Opinion Columnist
It’s hard to believe now, but before Donald Trump became the G.O.P.’s presidential nominee in 2016, Senator Marco Rubio of Florida was widely seen as a champion of the “reformicons” — conservatives who wanted the Republican Party to become more moderate and flexible, to move beyond its obsessive focus on cutting taxes for the rich and slashing benefits for the poor. Since then, however, Rubio has become a pathetic figure — not just a Trump toady, but someone who routinely tweets out stuff like this: “The $3.5 trillion Biden plan isn’t socialism, it’s Marxism.”
Indeed, we all remember the stirring passage in The Communist Manifesto where Marx declared, “Workers of the world, unite to spend 1.2 percent of G.D.P. on popular programs over the next decade!”
The fact that Republicans routinely say such nonsense is why the Biden administration should mint a $1 trillion platinum coin or declare that the Constitution gives it the right to issue whatever debt is needed to fund the government — or use some other trick I haven’t thought of to ignore the looming crisis.
Some background: We all learned in civics class — do students still take civics? — that federal policy on spending and taxing is set by a straightforward legislative process. Congress passes bills and if the president doesn’t veto those bills, they become law. End of story.
But there is, it turns out, a quirk in the budget process: Congress must also separately authorize the federal government to take on more debt.
Historically, this was considered a mere technicality: Of course Congress would approve borrowing if the spending and taxing bills it had already enacted led to a budget deficit. Not doing so would make no sense — not just because it would cripple government operations, but also because it would threaten financial havoc: U.S. government securities are the bedrock of the global financial system, used for collateral in many transactions. Threatening federal cash flows could therefore provoke a worldwide meltdown.
But U.S. politics aren’t what they once were. The Republican Party has become both radical and ruthless; let’s not forget that most G.O.P. legislators refused to certify President Biden’s election. And while this radicalized party cheerfully authorizes trillions in borrowing whenever it holds the White House, it weaponizes the debt limit whenever a Democrat is president.
During the Obama years, Republicans used the debt limit for blackmail, refusing to raise it unless President Barack Obama agreed to spending cuts — spending cuts the G.O.P. wouldn’t have been able to get passed through the normal legislative process, despite having partial control of Congress.
What’s happening now is even worse. Democrats control both houses of Congress, but Republicans are using the filibuster to block an increase in the debt ceiling with only weeks to go before we hit a wall and default on payments — and they aren’t even making specific demands. They simply don’t want to share any responsibility for governing. “There is no chance Republicans will help lift Democrats’ credit limit so they can immediately steamroller through a socialist binge that will hurt families and help China,” declared Mitch McConnell. If that sounds to you like meaningless word salad, that’s because it is.
Underlying all of this is the belief that voters will blame Biden for bad things that happen on his watch, even if Republicans deliberately caused those bad things to happen.
So what does this have to do with platinum coins? Well, there’s a strange provision in U.S. law that empowers the Treasury secretary to mint and issue platinum coins in any quantity and denomination she chooses. Presumably the purpose of this provision was to allow the creation of coins celebrating people or events. But the language doesn’t say that. So on the face of it, Janet Yellen could mint a platinum coin with a face value of $1 trillion — no, it needn’t include $1 trillion worth of platinum — deposit it at the Federal Reserve and draw on that account to keep paying the government’s bills without borrowing.
Alternatively, Biden could simply declare that the 14th Amendment to the Constitution, which says that the validity of federal debt may not be questioned, renders the debt ceiling moot.
And there may be other tricks I don’t know about.
Would any of these approaches basically mean using silly gimmicks to avoid catastrophe? Possibly yes. But given the stakes, who cares if the approach sounds silly?
Would using any of these gimmicks involve violating the spirit of the law even if they technically obey the letter? Of course — but Republicans are already doing that through their abuse of the debt ceiling.
Would any attempt to do an end run around the debt ceiling face court challenges? Yes. But the legal process would at the very least buy time to devise a better solution.
What about the politics? Look, the reason we’re in this situation is that Republicans have learned a terrible truth: Voters don’t know or care about process; they only react to how things are going. The G.O.P. believes that it can benefit from outright, naked sabotage; Democrats shouldn’t worry about undoing that sabotage through whatever tricks they can deploy.
Of course, if the Biden administration does do something unusual to avoid a debt crisis, Republicans will run blistering ads denouncing the action. But they’ll do that anyway! Which is where Marco Rubio comes in. He used to be considered a moderate; now he denounces a medium-size investment plan that appears to be highly popular as the second coming of Stalin. The Republican faux-outrage dial is already turned up to 11; how much worse can it get?
So go ahead, Democrats, and do whatever it takes to get through this. Gimmickry in the defense of sanity — and, in an important sense, democracy — is no vice.
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