The Platinum Coin Ploy

During the last major debt limit standoff in 2011, pundits and professors debated whether the debt ceiling itself was constitutional. According to some, placing a limit on the issuance of debt to cover the federal government’s financial obligations would violate Section 4 of the Fourteenth Amendment, which provides “The validity of the public debt of the United States, authorized by law, . . . shall not be questioned.” Therefore, some urged the President to disregard the debt ceiling should it be reached. Prominent academics on both sides of the aisle dismissed such arguments, but the question became moot as the President and Congress eventually reached a deal.

Well here we are again, only this time there’s a new argument for how the President should sidestep the debt ceiling: Direct the U.S. mint to issue a $1 trillion platinum coin that could then be deposited in the federal treasury to cover the government’s obligations, at least temporarily. Once the debt limit is increased, the coin could then be destroyed and the federal government could return to business as usual.

Authority for this move is allegedly found in the federal statute authorizing the U.S. mint to make commemorative coins, as the law contains language that would appear to authorize the federal government to issue platinum coins of any denomination by executive fiat. Of course this can’t be legal Kevin Drum protests. Others think it’s quite plausible, even a good idea. Former Representative Mike Castle, who authored the bill in question, thinks its preposterous a law authorizing the minting of commemorative coins could be used to circumvent the debt limit, but former Mint director Philip Diehl, who worked with Castle on the bill, thinks otherwise.

Whether or not the platinum coin ploy would be legal, this is not the sort of question likely to ever end up in court. It is hard to conceive of a plausible scenario in which anyone would have standing to challenge the legality of such a move. Taxpayer standing is highly disfavored and members of congress can’t sue just because they believe the President violated or misconstrued one of their laws. So the propriety of the platinum con ploy will have to be resolved politically; the courts will not be involved.

Using a coin to evade the debt limit may be legal — or simply unchallengable — but I’m with those who question its wisdom. If Congress authorizes spending in excess of federal revenue, it would seem that Congress has authorized whatever debt is necessary to cover its obligations — and in normal times, the debt ceiling is raised as necessary as part of the budget process. Of course, one might also assume that Congress would enact annual budgets, even if for no other reason than that is what the law requires. The 1974 federal budget act requires the President to submit a budget early in the year and obligates Congress to enact each year’s budget by April 15, but the Senate hasn’t even tried to pass a budget in years. And so instead of dealing forthrightly with the nation’s budget problems, we’re talking about whether to mint a $1,000,000,000,000 coin.