Could a trillion dollar platinum coin be minted by the administration in order to pay down federal debts—and avoid a debt limit showdown? As another debt ceiling fight approached in January, some economists and bloggers argued it could. But there were questions about its legality. CNBC Senior Editor John Carney offers three reasons why the coin trick wouldn’t work.
1 It’s Congress’s job. The Constitution assigns the financing of government to Congress. This is includes the power to coin and regulate the value of money. The Executive Branch cannot grab this power just because it doesn’t like the way Congress is handling the debt ceiling.
2 Congress can’t give Treasury that much power. While Congress can delegate to agencies, there are limits. Congress must supply an “intelligible principle” that an agency can follow. The platinum coin law passed by Congress appears to give the Treasurer a blank check—something Congress cannot do.
3 Money and debt depend on consent. Our Constitution declares that coinage, borrowing, and taxing are legislative powers. This was not an accident. Government power arises from the consent of the governed. Likewise, the effective issuance of debt or money depends on the consent of people to hold the bonds and bills issued. Using the platinum coin to overcome the debt ceiling turns this on its head.