On Saturday, the US Treasury Department said it would not use its powers to mint commemorative platinum coins to sidestep the federal government's current debt ceiling. The daring proposal, exploiting a quirk of language in a giant 1997 appropriations bill, had sparked a popular internet campaign around the Twitter hashtag "#MintTheCoin" and attracted serious attention from economists and politicians.
"Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit," Treasury spokesman Anthony Coley told The Washington Post's Ezra Klein. As Klein put it, "The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it."
Can we still avoid a global crisis?
The debt ceiling limits the total amount the Treasury can borrow by issuing securities to make up the gap between revenue and spending. US Treasury debt is to the global economy something like gasoline is to a car, so its sudden unavailability would be a very bad thing. Generally, the ceiling is expanded as Congress authorizes new deficit spending, but in 2011, a separate vote on the debt ceiling turned into a political crisis, when the House majority refused to authorize an expansion of the ceiling without cuts to spending. Briefly, it appeared that an expansion of the debt ceiling would be included as part of the "fiscal cliff" agreement. Instead, the debt ceiling was left off the table in those negotiations and will need to be addressed at some point this year, with Congressional Republicans as far apart from the Obama administration and Democratic leadership as ever. Hence, #MintTheCoin.
We may never know the real limits of the law
It was never entirely clear whether using a platinum coin to expand the debt limit would survive a challenge in federal court, although a co-author of the 1997 bill was quite sure it could. On Wednesday, White House spokesman Jay Carney downplayed the proposal, telling the press room that "nothing needs to come to these kinds of speculative notions." It's also never been determined whether President Obama's executive powers let him ignore the debt ceiling and authorize the Treasury to issue securities on his own authority, but Carney was even firmer on that point in December: "This administration does not believe the 14th Amendment gives the president the power to ignore the debt ceiling — period." It seems the Obama administration wants to leave responsibility for scoring political points through convoluted technical maneuvers to Congress.