Democrats and Republicans Agree: Minting a $1 Trillion Coin Is Not a Serious Idea

Democrats and Republicans agree on one thing: minting a trillion-dollar platinum coin to avoid a calamitous debt default is not an idea to be taken seriously.

Instead, lawmakers say the federal borrowing limit should be raised as it has been for decades: with Congress passing legislation and the president signing it into law.

“I haven’t heard any plausible case for that,” Sen. Elizabeth Warren (D-Mass.) told HuffPost when asked about the concept. “The debt ceiling crisis is fabricated by the Republicans. They don’t take the national debt seriously. If they were, they wouldn’t have voted to increase it three times when Donald Trump was president.”

The idea, which has been around for the past decade of brinksmanship by the Republican Party on the debt limit, involves the Treasury handing the Federal Reserve a trillion-dollar platinum coin. The Fed would then credit the Treasury with $1 trillion, allowing it to pay down debts and avoid an unprecedented default that experts say would rock financial markets and hurt the economy.

“I don’t think you have to flip a coin to solve a major problem like this. This is our country we’re talking about,” Sen. Mitt Romney (R-Utah) told HuffPost about the idea of ​​minting the coin, adding that President Joe Biden and House Republicans should sit down and come to an agreement. to increase the borrowing limit that included cuts to discretionary spending.

Sen. Thom Tillis (RN.C.) said such a plan would have “implications” and similarly urged the White House to negotiate spending cuts.

“It is not a magic wand. If we do, we are probably going to regret it,” she added.

Lawmakers aren’t the only ones dismissing the coinage talk. Treasury Secretary Janet Yellen told The Wall Street Journal over the weekend that the Federal Reserve probably wouldn’t accept a trillion-dollar platinum coin if the Biden administration even tried to mint one.

Last week, the Treasury Department began taking so-called “extraordinary measures,” which are becoming less and less extraordinary, to keep paying the federal government’s bills after the US hit its $31 debt limit, 4 trillion. Yellen said the US can keep paying its bills through at least June, giving Congress about five months to raise the limit.

Republicans are demanding sharp overall spending cuts and major changes to trust fund programs like Social Security and Medicare in exchange for raising the debt limit. It’s a tactic they’ve used several times in recent history, albeit only under a Democratic president. When they controlled the presidency and both houses of Congress in 2017, Republicans piled on spending and raised the debt limit without issue.

Democrats have vowed to oppose draconian spending cuts, as well as changes that threaten Social Security and Medicare benefits. With current funding, Medicare can keep paying full benefits through 2028 and Social Security through 2035. Last year, House conservatives proposed raising the retirement age for both Medicare and Social Security and cutting monthly payments for people with higher income.

The White House has indicated that Biden will meet with Republican Speaker of the House Kevin McCarthy (California) in the coming weeks to discuss the way forward on the debt limit and other legislative matters. For the moment, at least, Democrats say there can be no debt limit negotiation with a House Republican caucus that has swung sharply to the right, with members of the conservative Freedom Caucus wielding far more power than in previous years.

“Are these people crazier than the crazies of the past? Yes, they are,” said Sen. Brian Schatz (D-Hawaii). “But I think what is clear is that the only thing more dangerous than not negotiating with these clowns is negotiating with them. They are crazy and a cool head has to prevail in the House.”

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