Left Swoons for Loony ‘Magic Coin’ Plan
The
left must think Treasury Secretary Tim Geithner is a magician, since
they think funds to evade the debt ceiling can be conjured up in the
form of a platinum coin.
The
left-wing blogosphere has been promoting a loony idea to prevent the
GOP from being able to cut spending in debt ceiling negotiations. The
idea has gained traction with a Bloomberg News contributor and
well-known liberal economist Paul Krugman, and being heavily promoted by
sites like Huffington Post. So many people are talking about it that it
has a Twitter hashtag: #mintthecoin.
The
entire idea, which actually dates back to the fiscal cliff fight of
2011, is that there is an “obscure provision” that would allow the
Treasury Secretary Timothy Geithner to mint platinum coins. So the left
has gone overboard arguing that he create a $1 trillion coin to deposit
with the Fed and diffuse the entire debt ceiling fight, in spite of
arguments that it is unconstitutional and that the law was specifically
about creating coins for collectors. At least one proponent, Joe
Firestone who blogs at lefty sites FireDogLake and DailyKos upped the
ante urging a $30 trillion or $60 trillion coin be created.
The
Huffington Post has pushed the idea over and over and were at it again
on Jan. 7. That afternoon, Nobel prize-winning economist Paul Krugman
was in the top story on the homepage, “KRUGMAN URGES: MINT THE COIN”
blared the headline across the top of HuffPo. Beneath the enormous
picture of Krugman it said “‘The Decision Should Be Obvious’ ... GOP
Congressman Seeks to Ban Platinum Option, Implicitly Admits Coin is
Legal... Why Opponents Are Wrong.”
There
is so much noise coming from the left on this that CNN, Fox News and
MSNBC have all mentioned it in recent days. Other outlets from The
Washington Post, to Time magazine’s Swampland blog, to The Economist have also covered the campaign.
One particular CNN report claimed “It sounds crazy but some economists, some legal scholars say it is legal and could be done.”
At least CNN’s reporter Brian Todd included a voice of opposition, not
only a proponent. He spoke with WSJ columnist Stephen Moore who said, “I
think this is waving pixie dust over the debt and pretending the debt
is going to go away by one of these Washington gimmicks.” Todd also
poked a bit of fun at the idea by showing a video clip from “Austin
Powers.”
In spite of #mintthecoin fans
like Krugman, Josh Barro of Bloomberg, and Joe Weisenthal of Business
Insider, even some on the left see its flaws. One Atlantic writer called
it a “conspiracy theory," while a UK Guardian writer compared it to a “mad scientist’s plot.”
The
Democracy in America blog from The Economist called the notion a
“distraction” from the real fiscal issues facing the U.S. and said it “flirts with the heady unilateral decisiveness of fascism.”
Ultimately they concluded it would be better if commentators “would
rein in its id, stop its idle chatter about exotic, coin-based,
presidential monetary policy, and begin seriously to consider the more
probable but less glittering eventuality of a Greek-style default.”
Kevin Drum, of far-left magazine Mother Jones, wrote that it was “horrible, lawless policy” and that the law being cited as support for a $1 trillion platinum coin was actually just a technical
correction written to clarify what sort of coins the Treasury can make for coin collectors. “Courts are expected to rule based on the most sensible interpretation of a law, not its most tortured possible constructions,” Drum criticized.
Conservatives and business experts panned the idea. CNBC’s Net Net writer John Carney argued that the #mintthecoin plan was “unconstitutional.”
AEI’s James Pethokoukis talked to a bank analyst with Washington
Research Group. The analyst told him if the Treasury minted a $1
trillion coin “We [would] see chaos if the market has to confront
Treasuries where the debt is backed by Congress and those where it is
not backed by Congress. And the $1 trillion coin would expand the money supply by a considerable amount, which could spark serious inflation.”
Ralph Benko, editor of the Lehrman Institute's monetary policy website,
recently attacked the platinum coin proposal, noting its violation of a
monetary principle first established by the famed astronomer
Copernicus. He also pointed to the hyper-inflation experienced recently in Zimbabwe, when its government violated the same principle.
In
spite of left-wing opposition to spending cuts, there is a huge
spending problem in the U.S. The editorial board of Investor’s Business
Daily reminded readers of that very fact on Jan. 7, writing that Obama’s
debt commission “made clear that spending is the driving force behind
the nation’s debt crisis.” The final report of the commission said, “We should cut all excess spending -- including defense, domestic programs, entitlement spending, and spending in the tax code.”
