Talk of a trillion-dollar US coin has returned to Washington now that Congress is mired in another political impasse over raising the debt ceiling.
The idea for the pricey platinum -- which would be unprecedented but not necessarily illegal -- was originally floated in 2011 as a run-around in the recurring war between Democrats and Republicans over lifting the debt limit to enable the government to pay its bills.
Champions of the idea point to a 1997 law, which in theory would allow the Treasury Secretary to authorize a platinum coin at the value of his or her discretion.
The president could direct the Treasury Secretary to mint a $1 trillion piece that could be deposited in the Federal Reserve and used to cover a big portion of Washington's bills.
Such a maneuver would bypass Congress, which is again flirting with disaster. Treasury Secretary Janet Yellen warned on Tuesday that the government would run out of cash unless the federal borrowing cap is lifted.
Though it may seem far-fetched, the idea got far enough during the 2013 impasse that the Treasury Department explicitly ruled out minting the coin.
Former president Barack Obama alluded to the internal talks over the concept in a January 2017 podcast, just as he was leaving office.
"There were all kinds of wacky ideas," Obama said on "Pod Save America" of the 2013 discussions with staff.
But the solution has hardly been embraced by mainstream economists.
Critics include economist Paul Krugman, who wrote in March 2020 that the idea was "an accounting gimmick" that "wouldn't even fool anyone."
Laurence Kotlikoff, an economics professor at Boston University, said it was "the kind of thinking of a third world country."
"The essence of the issue here is printing money to pay the government's bills," Kotlikoff said. "And when you print enough money, you get inflation."
Policy makers are already grappling with pricing pressure in the wake of heavy fiscal spending during the pandemic. That marks a break from the anemic inflation seen over most of the last two decades.
Congressional Republicans have opposed raising the debt ceiling, arguing that President Joe Biden's enormous proposed investments in infrastructure and social programs are fiscally irresponsible.
For now, there is no obvious solution to the impasse, raising the possibility that the United States could default for the first time in its history.
But if the trillion-dollar coin draws eye rolls from economist, it is a source of curiosity on social media.
On Tuesday, House Speaker Nancy Pelosi said senior Democratic Representative Jerry Nadler "wants to have a trillion-dollar coin that doesn't require congressional approval."
Economics professor L. Randall Wray, a Bard College professor who has championed Modern Money Theory, which de-emphasizes the drawbacks of debt, said the special coin is no wackier than other expansionary financial maneuvers enacted by the Federal Reserve during the pandemic that have involved hundreds of billions of dollars of public and private debt.
"It is a work around," Wray said. "It sort of makes it obvious that the debt limit itself is a pretty stupid idea."
Wray and others note that massive infusions of liquidity by the Federal Reserve in the wake of the 2008 crisis did not spur inflation.
For Matthew Gertz of Media Matters for America, the question is not whether the trillion-dollar coin is too big, but whether it is big enough.
"A trillion-dollar coin isn't cool," Gertz wrote on Twitter. "You know what's cool? A quadrillion-dollar coin."
'Debt limit hostage taking' by McConnell backfired and is now helping Biden pass his agenda: analysis
Senate Minority Leader Mitch McConnell (R-KY) made a strategic mistake by refusing to help raise the debt ceiling, a congressional historian explained on MSNBC on Tuesday evening.
MSNBC's Lawrence O'Donnell interviewed Norm Ornstein about the path for raising the debt ceiling, which could plunge the economy into recession if not solved.
"Norm, it sounds like the debt limit would probably have to go into t reconciliation bill. Is that where we are?" O'Donnell asked.
"That's clearly what McConnell is trying to achieve," Ornstein replied.
"And there is something perverse about it from his perspective, as we know Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) said, 'What's the rush here? Let's take our time with this.'
"What this debt limit hostage taking and reckless behavior does on on the the part of not just Mitch McConnell, but every Republican senator, every single one that's joins with him, adds an urgency to getting that reconciliation package done," he explained. "This may have a perverse impact if we get this taken to a point where they deal with it in reconciliation."
"So this strategy could mean that the debt ceiling goes from being a legislative hostage to being a legislative engine pushing the reconciliation bill forward," O'Donnell said.
"And if that happens and we get rid of the debt ceiling ridiculous process once and for all and get both of these bills, reconciliation and the bipartisan infrastructure bill, I will take the bottle of wine sitting behind me and raise a glass to Mitch McConnell," Ornstein said.
Sen. Elizabeth Warren (D-MA) explained the path forward for the "Bipartisan Infrastructure Framework" and budget reconciliation bills that comprise President Joe Biden's "Build Back Better" agenda during a Tuesday evening appearance on MSNBC.
Anchor Lawrence O'Donnell brought up Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ).
"Where are we now?" O'Donnell asked. "These two senators have, in effect, stopped progress in the House and Speaker Pelosi is now trying to put something together with these two senators as what appears to be either the roadblock or the final pieces that have to be put together on this bill."
"Well, literally for months now, Democrats in the Senate, Democrats in the House, have been operating with one goal in mind and one understanding," Warren replied. "And that is there is going to be a lot that needs to be done in the reconciliation, this whole package. Yes, we need roads and bridges, we need water and sewers. But we also need child care and broadband, we need health care, we need housing, and most of all, we need to make a big down payment in the fight against climate change."
"All of it has been out there and the agreement has been we're going to move it altogether. And I hope that's the direction we're still going in. The house progressives have been terrific on this, they said we had an agreement, and we expect everyone to stick with the agreement," she said. "The progressives are not backing out, the House democrats are not backing out, I hope, and that means we got to move everything together."
"We cannot have the train leave the station and leave a whole lot of pieces of what American families need back on the platform. Not child care, not housing, not health care, not climate. We can't do that," Warren said.
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