There is a constitutional way to avoid the government shutdown and the potential default of US government debt, and the Secretary of Treasury (Jack Lew) holds all of the power to do it: minting a platinum coin worth a trillion dollars. The law allowing the Secretary to mint such a coin came from the 1997 Omnibus Consolidated Appropriations Act. The Act states the Secretary may mint and issue platinum coins in such quantity and and of such variety as the Secretary determines to be appropriate. The law was originally intended to help coin collectors who wanted the Treasury Department to mint cheaper platinum coins, but the law may be of more important use today. The idea to mint a trillion dollar platinum coin was originally floated by the controversial author of the “The Center of the Universe”, Warren Mosler, and his idea became more wide spread and gained traction during the fiscal cliff debates in 2012.
The problem is that if the coin is minted, it would be seen as a political power grab by the President. This is because executive and legislative branches would no longer be trusted to manage the country’s finances after minting such a coin. Still, on October 17th, the US government will be unable to pay some of its bills that are due and this could be catastrophic. Minting a platinum coin could be a last ditch effort by the President and Secretary to save the US from defaulting on its debt. Other options include invoking the 14th Amendment provision against the repudiation of US debt. This basically means that the government is not allowed to put to questioning the “validity” of its public debt. The provision was originally included in the Constitution to prevent a southern Democratic majority from repudiating Civil War debts.
What do you think? Will Democrats and Republicans negotiate with each other to find a solution? Will we go all the way to the brink of defaulting on our debt?