Look, like pretty much everyone else, I’ve been wrong about a few things in the debate about the platinum coin, but I was right on the main things. The White House, the Treasury Department, and the Federal Reserve have determined that it would not be legal. Look at the Treasury spokesman’s, statement below (emphasis mine):
“There are only two options to deal with the debt limit: Congress can pay its bills or they can fail to act and put the nation into default,” said Press Secretary Jay Carney. “When Congressional Republicans played politics with this issue last time putting us at the edge of default, it was a blow to our economic recovery, causing our nation to be downgraded. The President and the American people won’t tolerate Congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy. Congress needs to do its job.”
If there were any lingering doubts about how the Obama administration will handle the debt-ceiling issue, Saturday’s pronouncements put them to rest. Moments before Carney offered his statement, Treasury spokesman Anthony Coley offered one of his own, declaring that “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.“
Perhaps more importantly, I realized early on that the debate over the coin was working against us. The Republicans desperately want to avoid a complete cave-in on the debt ceiling, and the coin was giving them false hope that they could default and be bailed out by one of the most counterintuitive and difficult-to-defend stunts in the history of mankind.
They have already telegraphed that they have no stomach for another downgrade in our credit rating, but they would have loved to see our credit rating downgraded in the aftermath of the coin gambit. That way, they could shift all the attention onto the administration and their dictatorial power grab.
We were playing with fire when we created this escape hatch. The only way to get the Republicans to give up this hostage taking is to refuse to negotiate with them and have them conclude that the tactic isn’t tenable. Anything that interfered with that process, was counterproductive.
Now, some people had different purposes. The $60 trillion coin guy just wanted nice things for everybody. Others wanted to teach people lessons about fiat currency and undermine the Republicans’ fearmongerng about the national debt. Still others wanted to just coin enough money that we wouldn’t have to make any concessions about anything.
That was never the point. The point wasn’t to rejigger the whole economy and balance of powers to give ourselves a bunch of free money. The point was to get the Republicans to shut up and raise the debt ceiling. From that point of view, the Platinum Coin debate did the opposite of what it was supposed to do.