(CNN) - The Treasury Department does not plan to mint a $1 trillion platinum coin to avert federal government default, a spokesman said Saturday.
The statement from Deputy Assistant Treasury Secretary Anthony Coley effectively puts to bed speculation that the administration would act unilaterally to avert default. It also puts the onus on Congress – specifically Republicans in the House - to act.
"Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit," Coley said in a statement.
With the Saturday statement, the Obama administration has shut down two potential legal loopholes by which the executive branch could avoid the Treasury from being unable to pay the nation’s bills.
Defaulting on the nation’s debts would be catastrophic to the economy. Hesitation over the debt ceiling in the summer of 2011 caused the stock market to tumble and led to the downgrade of the nation’s credit rating by Standard & Poor’s.
As that debt deadline loomed, Obama was asked about one potential loophole: reading the 14th Amendment’s requirement that the “validity of the public debt of the United States … shall not be questioned.” If Congress were not to act, some have suggested, the president could act unilaterally, viewing the debt limit as unconstitutional and – in the words of former President Bill Clinton – “force the courts to stop me."
“I have talked to my lawyers,” Obama said that summer. “They are not persuaded that that is a winning argument. So the challenge for me is to make sure that we do not default.”
White House Press Secretary Jay Carney ruled out that constitutional route on Friday.
“There is no Plan B. There is no backup plan,” he told reporters. “There is Congress’ responsibility to pay the bills of the United States.”
On Saturday, he added, “Congress can pay its bills or they can fail to act and put the nation into default.”
"The president and the American people won't tolerate congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy,” Carney said. “Congress needs to do its job."
The second loophole would be to mint a platinum coin of a large denomination, which the Treasury is authorized to do and is not subject to the restrictions placed on coins made of other metals.
Stamped with a denomination such as $1 trillion, that platinum coin would be deposited into the Federal Reserve. Some experts say it would not inflate U.S. currency overall because the coin would be a technical device and not enter into circulation.
The laws which leave this loophole, however, were not designed for this purpose. The authorization to mint platinum coins, for example, was intended to allow production of collectors’ items.
The federal government has already reached the debt ceiling of nearly $16.4 trillion, Treasury Secretary Timothy Geithner said last month.
Right now, his department is staving off default through “extraordinary measures,” which are expected to cover the balance for a few more weeks.
Political analysts are looking ahead to what could be a showdown which rivals the fireworks of the fiscal cliff negotiations of just a few weeks ago.
Obama has called on Congress to raise the debt ceiling without the haggling.
"While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they passed," he said after the fiscal cliff deal passed the House. "If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic - far worse than the impact of a fiscal cliff."
But some Republicans want to see spending cuts balance an increase in the government’s borrowing ability. Among them is Sen. Deb Fischer of Nebraska, who delivered her party’s weekly address on Saturday.
"I believe we cannot agree to increase the borrowing limit without addressing our out-of-control spending,” she said. “That's why Nebraskans sent me here. That's what the American people demand. And that's what our children and our grandchildren deserve."
Congress is also faced with the March expiration of the resolution funding the government and the sequester, those across-the-board spending cuts created by Congress as an incentive to avoid a future showdown similar to the 2011 debt ceiling fight. But that attempt failed, and Congress avoided the fiscal cliff by, in part, pushing those cuts back to this spring.
The Treasury Department judgment was first reported by The Washington Post.
– CNN's Gregory Wallace, Kevin Bohn, and Charles Riley contributed to this report.
People, don't panic. Just because the Treasury Department says that it has no plan to mint the coin does not mean that the option is not available. The law giving the Treasury Secretary the power to mint platinum coins of any denomination is still there. When you are dealing with hostage takers, all options have to be on the table. Has Obama kept all of his promises? No.
Another day another fight when is this BS going to end, Delaying is not helping "it a no win", It has to go up to pay the bills, Just what reason are the Republicans fighting this, It not for the good of America it is harming it, Gun Control I know what it all about soon it will be open season on the Republicans and a few less won't matter to me, just might be a good thing to happen.
Typical liberal spin. We do not need to raise the debt ceiling to avoid defaulting on our debts; we only need to get out spending under control. Federal receipts are more than adequate to cover the debt load. They are less than adequate to cover both the debt load and all of the entitlement spending the Democrats insist on. If the president wants to avoid a default, he needs only to instruct Harry Reid to do his job.
They are allready doing this by printing 45 billion a month of new money. The effect is to destory the value of the dollar and every one living on a fixed income is screwed.
Just audit the Federal Reserve start there?
"Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,"
Which is ironic, considering that the minting of currency based upon a precious metal, would be the closest that the Fed or the Treasury has come to actually FOLLOWING THE LAW in the last decade.
Obama continues to show he's a wuss when it comes to stand up to the bullying from the rightwing extremism in the former GOP .
By throwing away all the 'weapons' within his arsenal ( even if they don't intent to use them, as they are wont to do), they are signaling to their commited and sworn enemies on the other side that the administration hasn't grown spine strong enought to facing them down.
All payroll to congress should be frozen until they can produce a balanced budget that resolves this country's debt problem. Then we might get results, and each month of frozen payroll will also help to reduce the debt. 547 members of congress * $174,000/year / 12 months = $7.9 million/month
Senator Deb Fischer – perhaps you haven't listened to "the American people" very well. We, the 'American people', want you and members of Congress to stop playing dangerous silly games with our lives and begin to compromise, negotiate and legislate according to the solemn oath of office you and your colleagues took with your hand on the Bible. It is the 'American people' and the country that you owe your allegiance to, not your political party. The sooner you and your Republican friends understand that in a mature, adult manner, the sooner our financial situation will recover. We, the 'American people', seriously pray that wiser heads and genuinely true patriots begin to surface in your Republican ranks.
For all the talk about the programs and benefits for the "middle class", how poor do they have to be to qualify? I made roughly 30k last year (roughly just under 200% of the poverty line). I have 1 child. Supposedly after applying, I learned that I make too much for welfare, food stamps, energy assistance, medical assistance (atleast I have the VA) So, does the poverty line establish the middle class? if so, then i am not seeing the benefit Welfare would have for the "middle class".
What does WH think? Only private federal reserve can mint coins and print money out of thin air and lend "their product" to anyone with interest rate, basically asking to repay back more money than exists on earth.
Suspend the federal income tax and make a federal tax on goods. That way we all pay fair taxes rich poor and illegals as well.
Of course it was never an option. The whole point of modern currency is that there is enough gold to back it up. If you mint a coin that large and dont increase the amount of gold in the reserver, the value of the US dollar would plummet, causing an economic disaster.
Perhaps Harry Reid could consider the merits of trying to pass a budget.
Congress hasn't passed a budget in years, effectively tying the ship's wheel to maintain the status quo. Now they want to effectively drop an anchor to alter their bearing. This is not a left or right issue, this is simply the culmination of years of stupidity.
Another stupid idea what the heck are you thinking just stop spending what you don't have and we might be able to reduce our debt.
The only strategy to force government to stop the crazed spending is to NOT raise the debt ceiling and make Congress and the executive branch agree on what amount government can we afford. Raising the debt limit is another kick down the road. Living off CRs, issuing more debt, raising punitive taxes, infinite QE and magic trillion coins are banana republic strategies that will eventually lead to collapse. The only sound strategy is to stop the stupid spending, deregulate our economy and grow our way back to prosperity; the way we used to do it before the NeoMarxists took over.
This is an excellent idea. If congress has nobody to confront, they will hopefully simply raise the limit to pay the bills "they" authorized
Wait a minute here. Only the Republicans are being blamed for the situation the US economy is in today. I tend to think it both the Republican and Democrats that have allowed the economic situation to develop and foster onto the mess that we find it today, almost equally share the blame. Ask yourself, have they really been doing their jobs or are they more intrested in junkets around the world at our expense, stuffing their pockets with oodles of money way beyond their paychecks (kind of makes you wonder where they get it all doesn't it.) And the wages, benefits, medical, retirement, and pandering they do makes you wonder how in the world they have time to do what they have sworn to do, their actual jobs! It is this old cogers opinion that we need to fine the whole lot of them at election day, clean out the old dead wood, and get a whole new crop of political leaders that can work together and make the US a strong economy and a respected nation once again. Until we do that we all will still slide down in the mess they have created for us, but avoid themselves.
Why does this article write " it is time for congress, specifically Republicans, to act". Are we ever going to see actual cuts in our spending....real, true budget cuts like any responsible entity would need to make. This President and most Democrats act like they do not even know what the word means. Yes it will be painful....but not nearly as painful as the pain we would feel if America defaults and the dollar is not the benchmark monetary standard for the world. Americans will really know financial pain if we do not demonstrate to the world that our politicians , Republicans and Democrats , are serious about putting our financial house in order.
California Governor Brown recently announced our budget is balanced-WITH A 2 BILLION DOLLAR DEFICIT! Now 2 billion is much better than the 20 billion shortfall we faced several years ago....but it IS STILL A DEFICIT. He is already making plans on how to spend the money we do not have. Here is a thought....How about running a surplus for several years and start a savings account with it.....you know, like for the future- when we might need the money for something real- like rebuilding from a massive earthquake or something. I suppose we could just borrow any needed money for such things from the Chinese however.
Since the 14th amendment pertained to paying obligations for the Civil War, couldn't they use it to raise the debt ceiling the amount of the defense budget and for other national security costs and for VA expenses, etc, etc? Good Grief, that would get us more than 3/4 of the way to a trillion.
Well the question is will the Republican's (once again) try and run America's standing in the world into the ground?
Just get Obama to make an executive decision and bypass congress since they're being financial terrorists.
I do not understand all the nonsense or why the fuss..
a) Further spending cuts and other ways of producing a $120bn per annum saving revenue entitlements review is a number and areas all can agree on.
Now if both sides compromise on cost cuts revenue and cutting defense/ entotlements reasonably where they reluctantly must to achieve a number what comes out is maybe a tough pill to swallow for both sides but a solution that NB still requires the debt ceiling to be raised.
b) if either side wants to be stupid and not negotiate where and how its gets done or put anything like further revenue out of the debate on pure ideology this will not = compromise QED failure again but then the I say let the sequester begin as written in the Budget act. that way is all spending cuts... not the right way but NB again would still require a debt ceiling increase.
Enough already... no side has any way of coming up with savings or revenue increases that remove the need for a debt ceiling increase.... this Phony reference is literally the elephant in the room.
That's right, GOP House: Raise the debt limit, or precipitate a default. The voters are watching.