Newspaper article International Herald Tribune

Minting a Theoretical Coin to Skirt Debt Limits Would Be Legal, If Unlikely ; Trillion-Dollar Disc Is Backed by Those Seeing No Threat from U.S. Debt

Newspaper article International Herald Tribune

Minting a Theoretical Coin to Skirt Debt Limits Would Be Legal, If Unlikely ; Trillion-Dollar Disc Is Backed by Those Seeing No Threat from U.S. Debt

Article excerpt

The idea for trillion-dollar coin is getting plenty of attention in Washington, even though it's unlkely to ever become reality.

A bizarre but seemingly legal idea for getting around the U.S. debt ceiling using a trillion-dollar coin is having its day in Washington.

The proposal, which originated in economics and business blogs has a vanishingly remote chance of being adopted. But it has won ample attention as Republicans and the White House seem to be headed for yet another standoff over a legal limit on the country's debt -- a fight that may come as soon as next month.

The idea is that the Treasury secretary might authorize the creation of a platinum $1 trillion coin, which might then be deposited at the Federal Reserve. Presto! The shiny new asset would erase a trillion dollars in debt liabilities.

That way, in theory, the Treasury could carry out its spending -- including disbursing checks for Social Security, the government- subsidized retirement program, and Medicare payments, a health insurance fund for the elderly -- without hitting the ceiling, a cap on total debt issuance that now stands at about $16.4 trillion.

It would be no more than an accounting sleight-of-hand, of course. But proponents, who argue that the dangers of the U.S. federal debt are only theoretical, say an abstract -- even if absurdist -- solution is politically defendable.

On Wednesday, in fact, the idea of a trillion-dollar coin made it all the way to the White House.

"There is no Plan B; there is no backup plan; there is Congress's responsibility to pay the bills of the United States," said Jay Carney, the White House press secretary, who responded to a dozen questions about the trillion-dollar coin at a news conference. "I have no coins in my pocket," he later added.

But Mr. Carney did not rule the idea out explicitly, deferring later questions to the Treasury Department. That has left a few supporters hoping that in one of his last acts in office, Treasury Secretary Timothy F. Geithner might trot out a shiny platinum coin emblazoned with "In God We Trust" and a 1 with 12 zeros behind it.

The workaround would involve exploiting a 1997 law that allows the Treasury to "mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the secretary, in the secretary's discretion, may prescribe from time to time. …

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