January 13, 2013

Going platinum

The inherent absurdity of minting a $1 trillion coin to avoid government default might just be enough to spur a solution.

By MATTHEW YGLESIAS Slate

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Staff Photo Illustration/Michael Fisher

Similarly, while obviously the coin trick sounds silly, it's nothing compared to the silliness of a sovereign country that issues its own currency defaulting on legally valid financial obligations. America needs political institutions that work in a climate of partisan polarization, and the debt ceiling doesn't fit the bill.

And this, in many ways, is the best possible reason to mint the coin. It's so absurd that it's bound to prompt a backlash.

Rep. Greg Walden, R-Ore., is already talking about a bill that would close the platinum loophole. It's a perfectly reasonable idea, and the Obama administration should be happy to agree to do it. If, that is, Congress agrees to close the loophole that lets it pass tax and spending bills that make a budget deficit necessary and then refuse to allow the borrowing to finance that deficit.

In other words, kill the loophole in exchange for eliminating the statutory debt ceiling.

In the future, the government will spend what Congress tells it to spend and collect the taxes Congress tells it to collect and rely on borrowing rather than platinum to fill the gap. That's how it ought to work, and it's how it has worked in practice for decades.

Turning the gap into a forum for high-stakes legislative brinksmanship was a terrible idea. But now that it's happened, we can't just exhort congressional Republicans to start being nicer.

We need concrete action, and silly-sounding though it may be, the platinum coin fits the bill.

Matthew Yglesias is Slate’s business and economics correspondent. Before joining the magazine he worked for ThinkProgress, the Atlantic, TPM Media and the American Prospect. His most recent book is “The Rent Is Too Damn High.”

 

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