The Volokh Conspiracy
Mostly law professors | Sometimes contrarian | Often libertarian | Always independent
The Biden Administration Considered And Rejected the Trillion Dollar Platinum Coin
The White House also rejected the Section 4 option, for now at least.
During a debt crisis, the trillion dollar platinum coin invariably turns up like a bad penny. And, predictably, Paul Krugman pushed the idea in the New York Times. I flagged this possibility on September 17. And I pondered it the Biden Administration would endorse this proposal. According to the Washington Post, the White House considered, but rejected the idea.
As part of their internal review, White House officials have circulated internal memos with a range of untested theories should Congress fail to resolve the debt ceiling standoff, including the creation of a $1 trillion "coin" idea that has been popular among some liberals for years, the people said. But these options have been set aside as unworkable, the people said. . . .
A senior official familiar with the matter said it was the administration's responsibility to review all possible options. Still, White House officials have reached the conclusion that unilateral action is not viable and the only way to avoid economic devastation is for Congress to act to maintain the full faith and credit of the U.S. government, according to the officials and Michael Gwin, a White House spokesman.
The White House has also considered the Section 4 option:
One legal theory that was reviewed is based on the idea that Congress in the event of a debt ceiling breach will have passed essentially irreconcilable laws. That is because the debt ceiling sets the maximum amount the Treasury can borrow to pay its obligations. But Congress has also simultaneously approved legislation requiring the federal government to spend more than the amount authorized by the debt ceiling.
According to some legal experts, the administration might then say the laws are in conflict, forcing the administration to pick between them. In that case, the administration would maintain that continuing payments is the best of two options — either of which would put them in defiance of congressional statute. . . .Some legal scholars have pointed to the Constitution's 14th Amendment, which states that the "validity of the public debt of the United States … shall not be questioned." The Obama administration also extensively reviewed this option during the debt ceiling standoff of 2013. But some legal experts say the 14th Amendment would not have to be cited for the administration to say it has to fulfill its spending obligations under congressional mandate
Mike Dorf, a leading proponent of this view, was interviewed by the Post:
"In my view, all the options under these circumstances are illegal if the administration is told to do something and also not do that very same thing," said Michael Dorf, a constitutional law expert at Cornell University, who said he has not been in communication with lawmakers about the matter.
"The view is often misattributed to me that it would be no big deal for the president to issue debt [after a debt ceiling breach]. It would be a big deal. It would be quite terrible and very likely would spook the markets. But the question is what to do if the spending and borrowing laws are inconsistent. I've expressed the view that the least bad thing to do under those circumstances would be to issue debt."
This option was considered by the Administration, but was ruled out--at least so far:
This theoretical possibility has been discussed by at least two high-ranking Biden aides in conversations in recent days, but ruled out because they believed it would be devastating for the country, said the people, who spoke on the condition of anonymity to discuss the sensitive internal deliberations.
The people involved in discussing this theory stress that they are not saying the White House would have the authority to unilaterally ignore the debt ceiling. They are also adamant that such a measure is not constitutional, and say it could still lead to enormous financial and economic damage. But, they say, should the administration reach the "X Date" — after which Treasury can no longer meet all its payment obligations — continuing to spend in defiance of the debt ceiling may be plausible if not necessary.
"They would have two choices — each of which is unconstitutional," one of the people aware of the discussions said. "This is the theory of the 'less constitutional choice': If the president did this it would violate the constitution, but to not do it would violate the constitution even more seriously."
I don't quite understand this comment. Neither does Gerard Magliocca, who writes:
I also must say that I did not understand what the unnamed source in the article means by saying that the President cannot act unilaterally if Congress fails to act because that would be devastating to the country. It would be devastating to the country to stop the country from being devastated?
If we are about to crash into the debt ceiling, we may yet see the Trillion dollar coin, or the Section 4 option. The unitary executive, and departmentalism, are alive and well.
