GOP Won’t Help Raise Debt Ceiling. Could Dems Suggest Minting $1 Trillion Coin To Bypass Them?

The Biden administration is looking to challenge Senate Minority Leader Mitch McConnell’s staunch position that the GOP will not raise the debt ceiling. One idea that was previously discussed by the Obama administration to circumvent a possible government shutdown was to exploit a loophole in the law and mint a $1 trillion platinum coin and deposit it at the Federal Reserve.

The Treasury Department hit the debt ceiling at the end of July. “While the Treasury Secretary has a bit of leeway to use ‘extraordinary measures’ to keep paying the bills for a few months using cash on hand and shuffling money around, that only works for so long. It may exhaust those abilities sometime in mid-October,” Business Insider noted in an article about the possibility of minting the $1 trillion coin.

Treasury Sec. Janet Yellen would have to order the coin.

Far-left Rep. Rashida Tlaib (D-MI) floated the idea of minting two platinum $1 trillion coins in response to the Coronavirus crisis in her Automatic BOOST to Communities Act. She wrote:

  1. the program would be funded directly from the Treasury, using its legal authority to create money via coin seigniorage, which is a statutory delegation of Congress’s constitutional power of the purse.
  2. The mechanics of this funding approach would be as follows:
    • The Treasury Secretary would direct the U.S. Mint to issue two $1 trillion platinum coins, under the legal authority provided by 31 U.S.C. § 5112(k).
    • Congress would direct the Federal Reserve to purchase the newly issued coins at full face value.
    • The Federal Reserve would complete the purchase by crediting the U.S. Mint’s account at the Fed with $2 trillion in reserves.

The Treasury Department can borrow money if it wants to finance additional government actions; Congress can raise or suspend the limit on the debt. The debt limit can be raised to pay for existing spending but doesn’t pay for new federal spending. – READ MORE

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