Mint the $1 trillion coin

 https://www.washingtonpost.com/us-policy/2023/01/29/debt-limit-unilateral/

Mint the $1 trillion coin

The most headline-grabbing proposal calls for the Treasury Department to mint a new platinum coin, declare its value to be $1 trillion, then deposit that coin in its account at the Federal Reserve. Assuming the central bank accepts the deposit, the $1 trillion would allow the federal government to finance its obligations. Crucially, it would not involve issuing new debt and thus would not violate the borrowing limit.

Proponents say the government is legally authorized to “mint the coin” under a 1997 law that gives the U.S. Mint the ability to make money off sales of novelty coins. That law specifies that it is “in the Secretary’s discretion” to mint and issue platinum coins of any denomination and quantity.

Even some skeptics of putting the idea into effect believe in its legality. “It’s technically within the president’s authority to mint a huge coin,” said Laurence Tribe, a Harvard law professor who is influential with the Biden administration. The director of the Mint when the 1997 law was passed has said the coin idea would be legal under the law, although the GOP congressman who helped write the platinum coin provision has said it is not.

 

Beyond questions that make fodder for barroom banter (Whose face goes on the coin? Would it be comically large? How do you make sure it isn’t stolen by Ocean’s 11 in the middle of the night?), legal experts have posed a range of questions about the idea. One key challenge is that the Federal Reserve may not accept the coin. (A Federal Reserve spokeswoman did not respond to requests for comment on how the central bank would react to a hypothetical attempt by Treasury to deposit a $1 trillion coin.)

“It truly is not by any means to be taken as a given that the Fed would do it, and I think especially with something that’s a gimmick,” Treasury Secretary Janet L. Yellen told the Wall Street Journal in an interview last week. “The Fed is not required to accept it; there’s no requirement on the part of the Fed.”

Some experts have suggested that the conservative majority on the Supreme Court could rule the coin illegal, forcing the administration back to the negotiating table with the GOP. More aggressive commentators, such as modern monetary theorists Nathan Tankus and Rohan Grey, have argued that the Biden administration could respond by ignoring the courts and somehow forcing the central bank to deposit the coin.

Don’t expect Biden to do anything that dramatic. A 2021 report by the nonpartisan Congressional Research Service raised several objections to the coin proposal: that fiscal and monetary policy are supposed to be separate, and this kind of interaction between the Fed and Treasury would blend them; that such a move would undermine congressional authority; and that doing so could undermine faith in the U.S. dollar.