Treasury Department rules out $1 trillion coin
January 12th, 2013
05:39 PM ET
1 year ago

Treasury Department rules out $1 trillion coin

(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.


Filed under: Deficit • Treasury Department
soundoff (73 Responses)
  1. Robert

    Why not? It makes perfect cents!

    January 12, 2013 11:58 pm at 11:58 pm |
  2. Tony

    It is important for Obama to keep in mind, though, that the GOP strategy is not exactly rational. Republicans are demanding that Obama cut spending, even though only Congress can cut spending. Because the GOP strategy is not rational, Obama can't count on them acting rationally. Even if Republican leaders want to avoid default– they know as well as anybody that a default will tank the economy, and when the economy tanks even the rich get hurt– they may not be able to control their Tea Party fringe.

    January 13, 2013 12:00 am at 12:00 am |
  3. vidal808

    so what are you guys talking about runaway spending? You guys I'd it.... So now it's YOU guys in Congress to solve the mess. it's not the President and specially not this one. he is trying so hard but the Repubs. The arty of NO just wants to make him look bad. Well, he will be President for the next 4 years, you like it or not.

    January 13, 2013 12:24 am at 12:24 am |
  4. XXxxMacleodxxXX

    We fight wars all over the earth and try to install a democratic process
    But, back home we are trying to subvert the democratic process.

    January 13, 2013 12:44 am at 12:44 am |
  5. Guest

    Got their tax hikes, now they balk at the spending cuts that the majority of Americans want. Gee, did anyone not see that coming?

    January 13, 2013 12:49 am at 12:49 am |
  6. Biggal195

    Obama should use both methods just to rub it in: The fourteenth amendment for half the debt and the coin for the other! Then just say, "So sue me!" What has he to lose? It's his second term. He can never run again. I'm so sick of these arrogant clowns toying with the US economy for their own gain. Someone needs to really slap them down hard. Unfortunately, we don't have a tough enough president to do it.

    January 13, 2013 01:09 am at 1:09 am |
  7. jerome

    Only due to the obvious comparison of Obama to Mugabe.

    January 13, 2013 02:05 am at 2:05 am |
  8. RA

    A coin worth 1 trillion dollars.

    My preciooouuusssss....

    January 13, 2013 02:50 am at 2:50 am |
  9. plain&simple

    Whatever happened to my country??? It's not Obama who is destroying it....just the people who hate him. So sad to see the extent we have fallen.

    January 13, 2013 04:35 am at 4:35 am |
  10. @RI_Roger

    CNN (1-13-13): I believe the Republican Congress will pass legislation that will specifically reduce spending and limit future growth increases of entitlement programs and domestic spending. It will be the Senate that will choose to ignore their responsibilities and not debate and/or amend the bill. That has been the mode of operation since 2008 and the American people are tired of it. We are at wits end with this democratically controlled Senate hiding behind parliamentary antics and blaming the House of Representatives for not doing their job…. Case in point, this week’s letter to the President from Democratic Senate Leadership suggesting the Administration side-step congress to raise the debt limit; who is not wanting to do the job they were elected to do?

    January 13, 2013 06:28 am at 6:28 am |
  11. Kenoscope

    Fire Congress, ALL of them and revoke their privilege of rerunning for their office as well as block Governors from posting special friends to replace them. Then have special public elections on the same day everywhere in the country one month later. This will gut Special Interest money and bring in fresh minds.

    Yes, this will stagger government and many very good people will be lost, however we had a DO NOTHING PARTY OF NO government last time, this country may not survive another one.

    January 13, 2013 07:37 am at 7:37 am |
  12. Dave

    "Defaulting on the nation’s debts would be catastrophic to the economy." This does not bother the Tea Party Republicans – they hate America.

    January 13, 2013 07:57 am at 7:57 am |
  13. Caihlyn

    I had my students calculate just how BIG the coin would have to be...to be worth $1 trillion dollars...Let's just say it would barely fit inside the classroom. So, I played the video showing that "oh...we are not actually making it out of $1 trillion dollars worth of platinum"...we are just writing $1 trillion dollars on an average sized coin made out of platinum and we hope the world doesn't mind if we believe it is really worth it. Now there is a lesson on how the value of money is just an agreed upon value, and if enough people believe it, you can trade your coins for real world goods.

    January 13, 2013 08:15 am at 8:15 am |
  14. dur

    Really some great ideas out there for dealing with problems, hey! How about some actual solutions on spending? So the dept ceiling is the latest scare? WOOOOO. What will be the outcome in this episode? Will the gov squeak out yet another worthless compromise? Stay tuned?

    January 13, 2013 08:23 am at 8:23 am |
  15. Jonus Grumby

    Why not just stop spending money we don't have?

    January 13, 2013 08:34 am at 8:34 am |
  16. Saint_John

    WTF are they thinking? So, one of the considered solutions was to implement some sort of a shell game using one trillion dollar platinum coins? All those holding public office should be drug tested immediately. Might do well to check for heavy metal poisoning as well. They all seem to be suffering from the Mad Hatter syndrome. Jesus !

    January 13, 2013 08:53 am at 8:53 am |
  17. Joe

    I know liberals don't use facts, but are they that stupid to think just printing money is a solution....

    January 13, 2013 08:59 am at 8:59 am |
  18. Manbearpig

    If it didn't work for Montgomery Burns, then it wouldn't work for us

    January 13, 2013 09:03 am at 9:03 am |
  19. YoungNiceGuy

    I thought the Trillion Dollar Coin idea was an amusing hoax, I guess not.

    Regardless, we need a mixture of spending cuts and new revenue. Taxes should be going up on everyone and we should be cutting as well.

    January 13, 2013 09:25 am at 9:25 am |
  20. Live Free or Die

    "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." The down grade was more about not dealing with spending than the hesitation. The hesitation shows that we recognize there is a problem abd the downgrade shows that we don't want to deal with it. It is immoral that his generation continues to shirk their responsibilities to live with in their means and force future generations to pay for it. This is certainly not the "greatest Generation" Either raise taxes to the level where we cover our spending (good luck with that) or control spending.

    January 13, 2013 09:29 am at 9:29 am |
  21. Lee

    Obama cannot invoke the 14th amendment.... No one is questioning the validity of the debt. The debt is valid. The ball in is the Senate's court as many budgets have been submitted but Harry Reid keeps sitting on them. Don't blame the republican's for this mess. When the democrats had the house, senate and presidency, they still couldn't pass a budget. So far in all of Obama's terms, he has yet to pass a budget.... How is this the republican's fault?

    January 13, 2013 09:30 am at 9:30 am |
  22. Thomas A. Hawk

    Brad76, the President did make a financial decision. That decision was to not bypass Congress.

    The President is correct. It is the role of Congress, more specifically the House of Representatives, to produce a solution. All revenue bills must originate in the House (Article I, Section 7).

    January 13, 2013 09:32 am at 9:32 am |
  23. bugmetoo

    Obama won't put out a budget. That would require making cuts he won't do.

    January 13, 2013 09:47 am at 9:47 am |
  24. Larry L

    @bugmetoo

    Obama won't put out a budget. That would require making cuts he won't do.
    =================================================================================================== The Congress debates and passes a budget which goes to the President's desk for signature and approval. The Congress appropriates money. Raising the debt ceiling is to pay for debts we've already incurred. If you want to control the debt you do it before it's incurred. If you want to trash America's economy and lower the bond rating (like the Tea Party wants), you fail to approve the raised debt ceiling.

    January 13, 2013 09:57 am at 9:57 am |
  25. fayray11

    it was ruled out because the neo-cons/gop would have used it to start another multiTRILLION dollar war.

    January 13, 2013 09:59 am at 9:59 am |
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