The U.S. Treasury yesterday dashed the hopes and dreams of many in the blogosphere when it announced that neither it nor the Federal Reserve saw the idea of a $1 trillion platinum coin as a realistic alternative to raising the debt ceiling.
Actually, the Treasury statement was much stronger and more definitive than that. Treasury spokesperson Anthony Coley said “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt ceiling.” In other words, neither the Treasury, which would produce the coin, nor the Fed, which would exchange the coin for cash, are wiling to enter into the transaction. That means that, even if minting and selling the coin is legal, neither the buyer nor the seller are interested in doing the deal. That effectively eliminates the trillion dollar coin option from the debt ceiling debate.
This was not, as some immediately said, the federal budget equivalent of unilateral surrender by the president. To the contrary, the reason the White House decided to stick a fiscal fork in the platinum coin plan, which came just about a month after it said in December it would not use another presumed debt ceiling escape route — the 14th amendment to the U.S. Constitution — was explained by Obama Press Secretary Jay Carney later in the day on Saturday. “There are only two options to deal with the debt limit,” he said. “Congress can pay its bills or they can fail to act and put the nation into default.”
This is one of the toughest hardball negotiating tacts the Obama administration has ever taken with Congress on the budget. The White House effectively is saying to the House and Senate (but primarily to the GOP-controlled House), that not raising the debt ceiling will be judged to be their fault. By refusing even to consider alternatives such as the platinum coin and saying it will not negotiate on the debt ceiling, the administration is putting the onus unambiguously on congressional Republicans and saying they he will not provide them with an out of any kind. He’s saying “Raise the debt ceiling or suffer the consequences.”
Try to imagine the situation if the White House were decided to use the 14th amendment, the platinum coin or any other creative way to get around the debt ceiling: As soon as it happened, the focus would immediately shift from what Congress refused to do to what the president did. Most of the commentary and debate would be about whether Obama’s action was legal and constitutional, there would be constant hearings and likely calls for his impeachment.
But the White House’s statements about the 14th amendment and the platinum coin keep the focus laser beam-like on Congress. The only question now is whether the House GOP will play legislative chicken with the increase in the debt ceiling that will be needed some time in late February or will cave when the time comes.