A bizarre but seemingly legal idea to get around the country's debt ceiling using a trillion-dollar coin is having its day in Washington.
The proposal, which originated in economics and business blogs and has a vanishingly remote chance of happening, has won ample attention and
garnered new controversy 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.
On Wednesday, 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' responsibility to pay the bills of the US," said Jay Carney, the White House press secretary. "I have no coins in my pocket.".
But Carney did not rule the idea out, 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 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 come from 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."
The idea was that a secretary might authorise the creation of a commemorative eagle coin, for instance, to be put on sale for collectors. But the law inadvertently gave the treasury secretary the power to mint, say, a $1 trillion coin, or even a $5 trillion coin, or even a $1 quadrillion coin.
Rather than selling it, he might deposit it at the Federal Reserve. Presto! The shiny new asset would erase $1 trillion in debt liabilities. Then, the treasury could carry out its spending without hitting the ceiling, a cap on total debt issuance that now stands at about $16.4 trillion.
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