Kevin Drum is really breaking out the heavy ammunition in his Quixotic crusade to convince people who actually know what they are talking about that scuttlebutt re: a trillion dollar coin is not legal not plausible proof that everyone needs to “get a grip” and stop, like, EMBARRASSING him — you guyz!!1:

Like it or not, the debt ceiling is legal. Congress has the power of the purse. On the other hand, using a ridiculous loophole in a statute about commemorative and bullion coins in order to evade the debt limit isn’t legal. Seriously, folks: just forget it. I know I’ll never have to pay up on a bet over this since it will never be tested, but this would go against Obama 9-0 if it ever made it to the Supreme Court.

It’s time to get a grip and leave the fever swamp thinking to the tea party. This whole thing is embarrassing. It will never happen; it’s an exercise in executive overreach that liberals are supposedly opposed to; and it would never make it past a judge.

And Drum knows this is fait accompli because he is (still) A. not a lawyer and B. not an economist and C. not precognitive (AFAIK), so all you lawyers and Nobel Prize-winning economists (and former heads of the U.S. Mint who, er, co-authored the law in question) who continue to say otherwise are FEVER SWAMPING, just like filthy, uncouth Teabaggers (ewwww).

Maybe we have finally reached the moment when Kevin Drum fully embraces his seemingly career-long destiny to mindlessly binge and purge rote conventional wisdom like a good little Beltway Broder also-ran — hey, it’s a living.

As for the coin idea itself, I’m with Jed Lewison:

[T]he idea of minting a trillion dollar coin is completely absurd. But it’s a heck of a lot less absurd than allowing Republicans to tank the national and global economy over a budget fight.

May it never come to that (and no, of course it won’t — on that front Drum & yrs truly are copacetic).

Update: via MoJo comments:

Note [Drum’s] shift to acknowledging that it is a “loophole”.
I’m pretty sure that if it’s a loophole in the law, then it’s legal. It can’t both be a loophole and illegal. Kevin seems to be saying that it’s illegal because it’s a loophole.

There’s some fever swamp thinking going on, alright.

(And it’s weird. It’s coherent to oppose the coin option and even strongly. But pushing the “plain illegality” is hackery and it’s hackery in the wrong direction!)

Update 2: Flashback — Jack M. Balkin, Knight Professor of Constitutional Law at Yale Law School, July 2011:

Sovereign governments such as the United States can print new money. However, there’s a statutory limit to the amount of paper currency that can be in circulation at any one time.

Ironically, there’s no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.

But but but FEVER SWAMP.

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  • I think the attention this idea is getting in the press is problematic. It’s distracting serious progressive thought away from real solutions at a time when the House Majority is poised to win huge victories for the austerity crowd. It’s like people are substituting wishful daydreaming for serious political thought.

    On Drum:

    At the level of this platinum coin question, what is “legal” is a kind of empirical question: What would result if the administration tried the coin hack?

    Nobody really disagrees that, at least initially, “all hell would break loose”. Legal challenges would probably be part of that but wouldn’t you agree that there would be all manner of strong legislative responses and perhaps some pitchforks in the street? Can you envision, in that context, the coin trick succeeding in the ostensible aim of mooting the debt limit? I can’t.

    And that is part of Drum’s point, whether he is a weenie or not: it ain’t gonna happen; the question is moot and arguably a waste of everyone’s time.

    What about the counter-factual condition where it does wind up before SCOTUS? Given the flexibility of statutory interpretation for avoiding (what the court sees as) utterly absurd conclusions, doesn’t his “9-0” assertion seem pretty reasonable?

    I think really you’re blowing his “9-0” rhetoric — which is meant to highlight the absurdity of the idea — up into something it is not.

    As for various “experts” saying “Hey, that could work….” Please notice that they are pretty much all on the “could work” side, that that side is sensationalistic and so gets headlines for those “experts”, and that the downside of being wrong is pretty much 0 for those experts since it ain’t gonna happen.

    This platinum coin idea reminds me by analogy of pop-science accounts about how maybe we can go back in time or worm-hole through space and time Star Trek style if only we can corral a black whole or use some Unobtanium to create some kind of massive quantum hand-wave — you know, because the boundary conditions of the equations can be vaguely interpreted sort of like that. In that analogy, ridiculing Drum seems to me similar to ridiculing someone for asserting that, no, Warp Drive isn’t going to happen anytime soon and the speed limit really, truly is C.

    Drum’s basic thesis on this one seems to be that it’s a dumb idea that could never survive the attempt to try it. Naively nit-picking readings of a few clauses in federal code aren’t responsive to what he’s saying.

    • I appreciate your points, and will do my best to address them more fully either later this evening or tomorrow.

      For now, let me say that I think that anytime a (nominally) progressive [sic] idea, dumb as a bag of hammers or not, sucks up this much media oxygen and attention (thus depriving wingnuts and establishmentarians the opportunity to pollute with their typical gasbaggery) it is a benefit for progs.

      Kevin Drum talks about a “hack gap” in punditry.

      Apparently he doesn’t actually like the way bridging it works in action, and is pushing in the wrong direction.

      • I think that anytime a (nominally) progressive [sic] idea, dumb as a bag of hammers or not, sucks up this much media oxygen [… could be a good thing …]

        True enough.

  • This guy seems extremely creditable to me. He presents the whole process as so cut and dried and mundane. “…ships it to the Fed, books $1 trillion, and transfers $1 trillion to the treasury’s general fund where it is available to finance government operations…” Really read the whole thing which I pasted below. I normally don’t paste entire blog posts but this is mostly a letter. It’s from here –> http://www.dailykos.com/story/2013/01/08/1177211/-Co-author-of-platinum-coin-law-weighs-in-on-trillion-dollar-coin

    Philip Diel ran the U.S. Mint from 1994 until 2000, and wasn’t just the author of the 50-state quarters, but was also the co-author of the law that authorizes the Mint to issue commemorative coins—the same law that would authorize the Trillion Dollar Coin being discussed as a way to bypass Republican opposition to raising the debt limit. He dropped us an email, spurred on by this diary, to further discuss the idea.

    You’ve written the best article I’ve seen yet on the trillion dollar platinum coin idea. [Those kudos are for Letsgetitdone/Joe Firestone– kos.]

    I’m the former Mint director and Treasury chief of staff who, with Rep. Mike Castle, wrote the platinum coin law and produced the original coin authorized by the law. Therefore, I’m in a unique position to address some confusion I’ve seen in the media about the $1 trillion platinum coin proposal.

    * In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years. The Secretary’s authority is derived from an Act of Congress (in fact, a GOP Congress) under power expressly granted to Congress in the Constitution (Article 1, Section 8). What is unusual in this case is that the law gives the Secretary discretion regarding all specifications of the coin, including denominations.

    * The accounting treatment of the coin is identical to the treatment of all other coins. The Mint strikes the coin, ships it to the Fed, books $1 trillion, and transfers $1 trillion to the treasury’s general fund where it is available to finance government operations just like with proceeds of bond sales or additional tax revenues. The same applies for a quarter dollar.

    * Once the debt limit is raised, the Fed ships the coin back to the Mint, the accounting treatment is reversed, and the coin is melted. The coin would never be “issued” or circulated and bonds would not be needed to back the coin.

    * There are no negative macroeconomic effects. This works just like additional tax revenue or borrowing under a higher debt limit. In fact, when the debt limit is raised, Treasury would sell more bonds, the $1 trillion dollars would be taken off the books, and the coin would be melted.

    * This does not raise the debt limit so it can’t be characterized as circumventing congressional authority over the debt limit. Rather, it delays when the debt limit is reached.

    * This preserves congressional authority over the debt limit in a way that reliance on the 14th Amendment would not. It also avoids the protracted court battles the 14th Amendment option would entail and avoids another confrontation with the Roberts Court.

    * Any court challenge is likely to be quickly dismissed since (1) authority to mint the coin is firmly rooted in law that itself is grounded in the expressed constitutional powers of Congress, (2) Treasury has routinely exercised this authority since the birth of the republic, and (3) the accounting treatment of the coin is entirely routine.

    * Yes, this is an unintended consequence of the platinum coin bill, but how many other pieces of legislation have had unintended consequences? Most, I’d guess.

    Philip N. Diehl
    35th Director
    United States Mint

  • I think that a big part of what Kevin is saying is that it’s problematic to meet crazy with crazy in the national political arena. If we’re going to show that the Teapubs are crazy, we have to act sane.

    So how crazy is the trillion-dollar-coin idea? Probably not as crazy as destroying the country’s full faith and credit by voting not to pay our bills, but pretty crazy.

    Obama has been using the strategy of acting sane while letting the Teapubs rave to show the country that they need to be repudiated. So I doubt he’ll go for the coin. There’s another justification around, via the Fourteenth Amendment, I think, that he might use.

    I am agreeing with Thomas Lord and Kevin here, from a slightly different viewpoint.

    • If we’re going to show that the Teapubs are crazy, we have to act sane.

      But the equivalency is clearly false. Is Kevin really saying that the co-author of the law, a top constitutional scholar, a Nobel-Prize winning economist, et al have mined Herman Cain territory by honing in on an obscure (but to varying degrees legally sound, if unprecedented) loophole?


      As previously stated, the idea is absurd and will never be utilized by Obama (except perhaps as a subtle, unspoken fulcrum to leverage his actual plan) — but the absurdity is hardly unique. Certainly no less absurd than the idea of a debt ceiling, which has still somehow become an accepted part of US political theatre, because (much like the coin is unacceptable, because.)

      Which, from my observation, seems to be a key point in raising the issue in the first place. Welcome to the era of reductio ad absurdum politics. Bridging the hack gap isn’t pretty, because HACKS, obvs, but it’s vital if progs are to drown out the ever-present drone of deficit fundamentalism. Deficit uber alles has become so accepted as simply The Way it Is in Washington that we don’t truly get just how crazy most of those “acceptable” ideas are (or at least were, until they weren’t, because HACKS).

      The thin line dividing ‘crazy’ from ‘conventional wisdom’ is an arbitrary construct, easily redefined with a little concerted effort — and the mainstream conservative movement has known, accepted and exploited, Schopenhaur-style, for years now, with astounding, disturbing success.

      (The best thing I can say about the coin idea: it makes the 14th amendment solution seem far less extreme by comparison. Which is also maybe another thing proponents have taken into consideration.)

      • I agree that there is a Hack Gap and that it has hurt liberals. But I do think that “let them rave” is an important part of Obama’s strategy and, in order for it to work, he has to look extra sane. And it may be that the purpose is to make the 14th amendment solution look sane. It’s always useful to have extremists for this reason, and serious reformists like Martin Luther King have always recognized this.

        And yes, the definitions of crazy hinge on because. That’s sort of the definition of conventional wisdom and what Obama has to work with.

        In an ideal world, we would be arguing issues. That’s the sane position and why Obama has to be the sane one in this discussion, if we ever want to get closer to that ideal world than the crazy we’ve got now.

        • But who is asking Obama to pick up the baton of batshit? Quite frankly, this gives Obama the perfect foil to come out as the only adult in the room with his own plan (“hey, at least it’s not a trillion dollar coin — now THAT would be crazy”).

          Set the margins as far apart as you can, leaving you lots of room between.

          • As we’ve seen in past battles (eg, health care), the specifics (and pedigree) of a policy proposal are entirely irrelevant — all that matters is that a Democrat has made the proposal and it must be opposed, regardless. The Republicans will denounce (and attempt to marginalize) anything the Dems put out in the marketplace of ideas as radical left-wing claptrap.

            Better to initially offer a truly marginal proposal to be flayed than something with plausible efficacy (see single payer vs. public option — the option ended up being sacrificed as the designated unworkable, “marginal left” proposal rather than the sensible compromise that it was intended to be).

  • What is particularly difficult is the notion that somehow this idea is crazy. Why is it crazier than the current system whereby the only way for the sovereign to create money is through the issuance of debt by the Fed that can only be sold to private banks that then get to profit on the spread between the low buying price and what they can charge borrowers for that same money? And in this zero bound situation they don’t even lend it but instead buy government bonds that pay more interest than they are charged for the money by the Fed. This is rational?

    Our problems are far more fundamental than this particular political impasse, but somehow the Fed-bank monopoly on money creation has got to be broken and the power returned to us in the form of our government so that it can properly allocate resources to serving the commonweal. Plainly the “market” no longer can do this if it ever could. The market works where government properly does its job of looking after the common welfare. When it fails in this, markets collapse because they are predicated on greed – not service. This is gross simplification and there are lots of little demurrers but overall I believe it to be true.

    Finally, there is no predicting what the Supreme Court will do or even if there is a party that can or would actually bring an action on this. Given the present political face of the Court a 9-0 is virtually impossible on something like this and it is very difficult to read where along the libertarian/wall street conservative continuum the right-wing Justices lie.

  • Overton Window anyone?

    For once we are moving the Overton Window in our direction. A few months ago a high fed official had not even heard of the idea. Now it is an acceptable topic of conversation. A classic case of the Overton Window being moved and being moved away from the wingnuttery of the corporate authoritarians. Granted the window still rests in their court but maybe someday we can push the window out the door and onto the street so we can block traffic and reduce carbon emissions and save the planet from climate change.

  • It certainly is sucking the oxygen out of the crazysphere. And that’s good. As long as there’s a crazysphere, it’s good to have it occupied by something relatively harmless.

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