Looking to the next debt-ceiling fight, Nadler proposes a trillion-dollar coin trick
Rep. Jerrold Nadler has an admittedly "out of the ordinary" solution to the coming fight over the debt ceiling.
"There is specific statutory authority that says that the Federal Reserve can mint any non-gold or -silver coin in any denomination, so all you do is you tell the Federal Reserve to make a platinum coin for one trillion dollars, and then you deposit it in the Treasury account, and you pay your bills," Nadler said in a telephone interview this afternoon.
I asked whether he was serious.
"I'm being absolutely serious," he said. "It sounds silly but it's absolutely legal. And it would normally not be proper to consider such a thing, except when you're faced with blackmail to destroy the country's economy, you have to consider things."
Liberals like Nadler got a lot of what they wanted from the president's deal to avert the fiscal cliff—an extension of unemployment insurance, a final resolution to the Alternative Minimum Tax, the elimination of the Bush tax cuts for the wealthiest Americans, and no reduction in entitlement benefits—with the glaring exception of an automatic increase in the debt ceiling, and a permanent solution to the deep sequestration cuts, which were put off for another two months as part of the deal.
Republicans have made the debt ceiling a rallying cry, exacting deep spending cuts from President Obama last year, after threatening not to pay the country's debts if he failed to agree.
Obama has since pledged not to negotiate over the debt limit, which pays existing debts, and Nadler said last night's deal will be viewed through the prism of that promise.
If President Obama can somehow stick to his guns on the debt ceiling and the sequester, Nadler said the deal "will be viewed as a major step forward economically, and in terms of social justice. If we do cave in two months from now, this won't look so good. I hope we won't cave in."
But Nadler conceded that's going to be "very difficult" to prevent, especially with Republicans already preparing for such a fight.
Republican senator Lindsey Graham, in advocating for a "yes" vote on the fiscal cliff deal, told fellow Republicans to "save their powder" for another debt-ceiling fight, where the party was more likely to win concessions from the White House.
Nadler sees it as an old-school racket.
"It's like in the old gangster movies: 'That's a nice economy you got over there, pity if it should happen to blow up—if you don't do what I want.' That's exactly what they're saying. That's exactly what Lindsey Graham is saying."
Nadler said the trillion-dollar coin was one of two options to avoid the debt ceiling fight; another would be for the president to use his power under the Fourteenth Amendment, which says the validity of the public debt "shall not be questioned." (Nadler tried to press the president toward that option last time, but to no avail.)
"It gets around this artificial debt-ceiling thing which has no economic justification," he said. "And, by the way, by the way, none of this has to be done. All the president would have to say is, 'I would do it if necessary.'"