Trillion Dollar U.S. Coin

The trillion dollar coin is a concept that emerged during the United States debt-ceiling crisis in 2011, as a proposed way to bypass any necessity for the United States Congress to raise the country's borrowing limit, through the minting of very high-value platinum coins. The concept gained more mainstream attention by late 2012 during the debates over the United States fiscal cliff negotiations and renewed debt-ceiling discussions. After reaching the headlines during the week of January 7, 2013, use of the trillion dollar coin concept was ultimately rejected by the Federal Reserve and the Treasury. Five days later, Senate Minority Whip John Cornyn announced that Senate Republicans would end their threat to block an increase in the debt ceiling.

The concept of striking a trillion dollar coin that would generate one trillion dollars in seigniorage, which would be off-budget, or numismatic profit, which would be on-budget, and be transferred to the Treasury, is based on the authority granted by Section 31 U.S.C. § 5112 of the United States Code for the Treasury Department to "mint and issue platinum bullion coins" in any denominations the Secretary of the Treasury may choose. Thus, if the Treasury were to mint one trillion dollar coins, it could deposit such coins at the Federal Reserve's Treasury account instead of issuing new debt.

31 U.S.C. 5112(k) as originally enacted by Public Law 104-208 in 1996:

The Secretary may mint and issue bullion and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time.

In 2000, the word "bullion" was replaced with "platinum bullion coins".

Platinum bullion coins can, by this statute, be minted in any denomination, whereas coins in any other specified metal are restricted to amounts of $50, $25, $10, $5 and $1. This is the origin of the concept of minting a very high denomination coin, since the platinum clause provides the only loophole.

Philip N. Diehl, former director of the United States Mint and with Republican Congressman Michael Castle co-author of the platinum coin law, has said the procedure would be permitted by the statute. However, Castle says he never intended such a use. The platinum coinage provision was eventually passed by a Republican Congress over the objections of a Democratic Treasury in 1996.

Laurence Tribe, a constitutional law professor at Harvard Law School, said the legal basis of the trillion dollar coin is sound and that the coin could not be challenged in court as no one would have standing to do so. Professor Jonathan H. Adler of the Case Western Reserve University School of Law has said that he believes the legality of the trillion dollar coin to be dubious.

Analysis and Reaction

Some commentators have argued that although the concept may be strictly legal, it would weaken the checks and balances system of U.S. government even if the spending that the minting of the coin would allow has already been authorized by Congress. Journalist Megan McArdle wrote that "minting a $1 trillion coin neatly end-runs GOP obstructionists, but only by proving that the president himself has little respect for the institutional restraints on his office." Another journalist, Felix Salmon, wrote that the concept "would effectively mark the demise of the three-branch system of government, by allowing the executive branch to simply steamroller the rights and privileges of the legislative branch". Salmon went on to explain that he does not agree with what Congressional Republicans are doing, but they have a right to do that, and the president should not use the trillion dollar coin option to circumvent them. In Salmon's words, "Yes, the legislature is behaving like a bunch of utter morons if they think that driving the US government into default is a good idea. But it's their right to behave like a bunch of utter morons."

On the other hand, many economists and business analysts endorsed the coin as a way to counter threats by congressional Republicans to force the country into default by refusing to raise the debt limit. Paul Krugman said "So minting the coin would be undignified, but so what? At the same time, it would be economically harmless — and would both avoid catastrophic economic developments and help head off government by blackmail." He also declared the trillion dollar coin debate to be "the most important fiscal policy debate of our lifetimes".

Michael Steel, spokesperson of House Speaker John Boehner, dismissed the concept by comparing it to a Simpsons episode called "The Trouble with Trillions", which aired 13 years before the United States debt-ceiling crisis, in which Homer Simpson is on a mission in search of a missing trillion dollar bill.

On January 7, 2013, Republican congressman Greg Walden announced he would introduce a bill to close the platinum coin loophole. Rep. Walden said that the intention is to "take the proposal off the table". The bill is opposed by New York representative Jerry Nadler, who says that the idea remains a valid option.

On January 12, 2013, the Treasury and Federal Reserve announced they would not mint a platinum coin, and five days later, Senate Minority Whip John Cornyn (R-Texas) announced that Senate Republicans would end their threat to block an increase in the debt ceiling.

                               https://en.wikipedia.org/wiki/Trillion_dollar_coin

See also:  https://en.wikipedia.org/wiki/National_debt_of_the_United_States