It sounds like a wild and madcap idea.
But, then again, there are many people in Washington determined to keep spending money the government does not have and can never repay – people including Barack Obama.
Let me explain what I call Obama’s “trillion-dollar coin option.”
Sometime in February, Washington will hit the debt limit of $16.4 trillion unless Republicans in the House of Representatives agree to raise it for the third time since they won control of the lower house and pledged to do something about what everyone agrees is a borrowing and spending crisis.
This crisis is the real “fiscal cliff.” Most Washington insiders and the media elite suggest a shutdown of some government services is the “fiscal cliff” the nation faces. Actually, it’s just the opposite. The shutdown of useless government programs and unconstitutional departments and counterproductive agencies is indeed the only viable solution to the real economic crisis America faces.
It’s going to have to be done sooner or later – and the sooner Washington politicians and their ignorant, selfish and dependent constituencies realize this, the less pain America will experience in the long run.
That’s why I believe the very best short-term solution is for Republicans in the House to refuse, under any circumstances, to raise the debt limit. They have the power to stop the borrowing-and-spending madness and begin the return to constitutionally limited government by refusing to go along with a hike in the debt limit.
If you like this idea, you can help persuade the House Republicans by joining the “No More Red Ink” campaign today, sending every member of the House Republican majority a red letter urging them to take this responsible action that would effectively defund Obamacare and force Washington to bring government spending under control right now.
But back to Obama’s “trillion-dollar coin option.”
What could Obama do if denied a debt-limit increase? How could he maintain the current irresponsible and unconstitutional spending plans and even increase overspending without more borrowing power?
One option Obama has talked about is simply to challenge the debt limit under Section 4 of the 14th Amendment to the Constitution. What does that section say? “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.”
Personally, I believe all debt accumulated by the government in spending programs outside the purview of enumerated powers of the Constitution is already illegal – and should never be repaid. But that’s not what the Obama administration has in mind. It has considered demanding more patently unconstitutional spending and twisting the means of the 14th Amendment to suggest that such obligations “shall not be questioned.”
That’s one bizarre option under consideration in Washington.
The other is even crazier – that’s the “trillion-dollar coin option.”
There’s a loophole in current law that permits the Treasury Department to mint as many coins of platinum as it wants and assign them any value. So the Obama administration could simply order the U.S. Mint to produce two platinum coins at a value of $1 trillion each. This new “money” would then be deposited with the Federal Reserve as payment for past debt, reducing the amount the government owes to $14.4 trillion overnight. Just like that, the debt limit is no longer a problem for another 18 months or so – at which point, presumably, two more $1 trillion platinum coins could be produced.
Here’s what the law says: “The Secretary may mint and issue platinum bullion coins 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.”
Sounds too good to be true, doesn’t it?
Of course it is. It’s a twisting of the law intended to set rules for commemorative coins, not to finance the operations of the government. I don’t think the Fed is going to like it one bit, which doesn’t bother me. But the Fed is an immensely powerful institution of private bankers – some believe more powerful than the elected government. The move would likely further damage the nation’s credit score, which has already been downgraded. And, of course, if it works, the government would have even less incentive to bring spending under control, which advances the country toward the tyranny of what I call “unlimited government.”
Yet, this option is actually being discussed in Washington today.
That’s just how crazy things have become in the nation’s capital.
The unthinkable is suddenly becoming very thinkable.
As the Washington Post reported earlier this month, “… if, for whatever reason, Congress doesn’t raise the debt ceiling as part of the fiscal cliff negotiations, then some of these wacky ideas may get more attention.”
And remember who sits in the White House with what he believes was a mandate from the American people to continue his profligate spending of the last four years.
Here’s a two-minute visual illustration of America’s ultimate “fiscal cliff”: