Ryan Cooper of MSNBC is another advocate of the platinum coin solution to the threatened Federal debt default. If you’ve not been paying attention, this hypothesized imminent catastrophe is the fact that the amount of money that can be borrowed by the Federal Government is limited by law, and when we run into that limit then the government cannot borrow more to, say, pay subcontractors, employees, and any other liability. House Republicans have so far refused to up the limit, demanding Democrats cut spending on a collection of institutions, such as Medicare, and thus letting the Republicans bypass the primary, preferred, and only legitimate way to change those programs: legislation. What they’re trying to do is extortion, as many have pointed out.
Incidentally, the House Republicans, or at least the House’s Freedom Caucus, think they should be able to pick and choose who gets paid in the meantime, but the President, the Senate Democrats, and quite possibly the Senate Republicans have all slapped the House GOP’s hand.
Cooper’s advocacy is for an outré counter-strategy called the platinum coin solution:
All this is why the famous platinum coin is Biden’s most legally defensible option, despite how silly it sounds. A 1997 law clearly grants the treasury secretary the ability to mint platinum coins of any denomination, in part with the intended purpose of making profit for the government through seignorage [WOTD here – haw]. If Congress says that the president must spend, cannot borrow, but can mint, then the way is clear for a legal stickler. Mint a trillion or two in platinum coins, deposit them at the Federal Reserve, and hey, presto, problem solved. Economically, it would be virtually identical to borrowing the money, and presumably at some point the ceiling could be raised and the coin spending replaced with normal debt.
More on the platinum coin solution is here.
Now, I’m no expert on this sort of thing. Arguably, no one qualifies as such when it comes to a financial strategy that has never been promulgated before. It’s worth noting that Treasury Secretary and former Federal Reserve Chairman Janet Yellen disagrees with Cooper, as he notes:
Yet administration lawyers apparently disagree. Yellen has further said the coin is a “gimmick” that “compromises the independence of the Fed, conflating monetary and fiscal policy.” This is a weak argument in context — it’s hard to see why a gimmick that allegedly erodes the (highly overrated) independence of the Fed would be worse than financial Armageddon.
Senator Mitch McConnell (R-KY), current leader of the GOP in the Senate.
In the end, though, I have to wonder if Cooper is trying to analyze the wrong problem.
Anyone who has been paying attention to President Biden knows the President’s strongest domestic concern is not a debt default, but, much to the consternation of the GOP, the House GOP itself. Biden regards their behavior as poisonous to the United States. He’s said this a number of times.
So how does one defang the serpent?
Not by negotiating with the extremists. It grants them legitimacy and a reputation for being effective. They are wild-eyed extremists, and letting them acquire a reputation for being part of the mainstream would simply encourage them to repeat this illicit maneuver.
So, instead, they are being isolated. They are told to follow the rules, they are virtually being told to grow up. For many, including myself, Biden is running the risk that the House GOP won’t abandon the extremists, and we’ll go into default, world-wide financial meltdown, blah blah blah. But Biden and his advisors may calculate that such a disaster is better than letting the inmates run the show – and then can be used to end the careers of the troublemakers. They may view this as a win-win situation – and it’s a position not without legitimacy.
In the end, I think the point here is to blunt the extremists’ influence, and to imperil their careers. Solve the default problem? Sure, that, too.
It’s just what you think: the Plantae version of Senator McConnell, See above for the human version.
But, really, it may be to chase the nut-cases out of the government. This may be part of the McConnell Reform Effort.
What!! you say?
Senator McConnell (R-KY), much as it pains me to say it, may represent the sanest segment of the current Republican Party. He’s certainly no fan of such lunatics as former President Trump, or Senators Scott (FL), Johnson (WI), or the Freedom Caucus. I, personally, think he’s displayed exceptionally poor judgment over the years, resulting in an arrogant, overweening super-majority on SCOTUS that is bringing public opprobrium on the institution, and an inability to write serious legislation when he’s in charge of the Senate. But, compared to the other inmates, he may be the most sane, and he seems to be competing with the far more extreme members of the GOP for access to the controls of the party.
And so I call it the McConnell Reform Effort.
And sigh.
