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An amusing idea is beginning to take hold among the country’s leading economic thinkers.If the Republicans in Congress are really irresponsible and outrageous enough to hold the reputation and economy of the United States of America hostage to win a few re-election points, then perhaps the appropriate response is for the Treasury to save the country by minting a “trillion-dollar coin.”
If you’re like most people, you’ll jump to the wrong conclusion when you hear about this “trillion-dollar coin.”
You’ll think that the “trillion dollar coin” is just another way for the government to print money out of thin air to pay for spending we can’t afford.
But that’s actually not what the “trillion-dollar coin” idea is.
The “trillion-dollar coin” is just a legal gimmick that responsible people in the U.S. government might use to enable the country to pay bills and honour prior commitments … without relying on a group of selfish, irresponsible people in Congress to first raise the debt ceiling first.
Basically, the “trillion-dollar coin” would just allow the Treasury, which pays the country’s bills, to keep writing checks regardless of what Congress does with the debt ceiling.
Photo: Business Insider, St. Louis Fed
And then the hundreds of millions of other reasonable, responsible people in the country can go on about their business until the folks in Congress finally grow up enough to address our budget problem like adults.Business Insider editor Joe Weisenthal, one of the main proponents of the “trillion dollar coin,” explains in detail here how the mechanism would work. He also debunks some of the myths that have sprung up around the coin, including the idea that it would cause instant hyper-inflation.
To be clear:
The “trillion-dollar coin” is a ridiculous idea.
It is an absurd legal gimmick that would ordinarily be the furthest thing from the minds of serious, responsible people who have been elected to lead this country through a challenging period.
But the problem is that some of the people who have been elected to lead this country have revealed themselves to be unserious, irresponsible people.
Photo: Business Insider, St. Louis Fed
By threatening to turn the United States of America into a deadbeat nation that refuses to pay its bills.That’s right.
A handful of Republicans in Congress are threatening to refuse to allow the United States Of America to pay the bills and fulfil commitments that the United States Of America has already promised to pay and fulfil.
Not because the United States of America can’t pay these bills.
Just because this handful of Republicans don’t want the United States of America to pay these bills.
In other words, a handful of Republicans in Congress are threatening to turn one of the most financially respected and responsible countries in the world into the equivalent of, say, Zimbabwe.
Why are these Republicans threatening to do this?
Because the Republicans, rightly, point out that the United States Of America is currently spending way more than it takes in and that this behaviour cannot go on indefinitely.
On that point, the Republicans are being clear-eyed, reasonable, and responsible. And clear-eyed Democrats agree with them.
But then the question becomes “how should the United States address its long-term budget challenge?”… and that’s where politics comes in. And the Republican view is that it should be their way or Armageddon.
The Republicans want the United States to cut spending on government programs that provide money, health care, and food to poorer and older Americans.
And they want that spending cut now.And if that spending isn’t cut now, well, then, the Republicans will just throw the United States Of America into default.
That is not a reasonable or responsible position. It’s an outrageous and irresponsible position. But this country has become so polarised and dysfunctional that it’s actually being treated as a reasonable position by many responsible people who should know better.
Importantly, this country does have a long-term budget problem, and that problem is going to require discipline, hard choices, and economic growth to solve. Those hard choices are going to include reducing the growth of some popular government spending programs, as well as the increase in some unpopular taxes. And the United States government absolutely, positively has to begin to make these hard choices in the next couple of years, or the U.S. really is going to become Zimbabwe.
But these hard choices should be made responsibly, by serious, reasonable people. They should not be made by threatening to put the country into default — or, for that matter, by minting trillion-dollar coins.
If the Republicans persist in their irresponsible, outrageous threat to hold the whole country hostage, reasonable people will have a choice:
* They will have to accede to the Republicans’ demands (which, it is only a little stretch to say, is akin to negotiating with domestic economic terrorists),
* They will have to fight outrageous tactics with an outrageous tactic of their own.
Minting a “trillion-dollar coin” is one of those potential outrageous tactics. And it is actually now being discussed by serious people as a way to keep moving the country forward.
The other potential tactic, which is far more reasonable, is for President Obama to follow President Clinton’s suggestion and just issue an executive order declaring that of course the United States will pay its bills and honour its commitments and give the Treasury the authority to do that.
Yes, the Republicans might scream that this is illegal.
And they might take the President to court.
But the President will probably have a good legal argument of his own, which is that, when a group of selfish, irresponsible people threaten to hold the entire country hostage to advance their own agenda, emergency measures are justified.
We have big economic and budget challenges in this country, and we need to solve them. But we need to solve them like adults, not children. Threatening to put the United States of America into default just to score political points is not an adult tactic. It is a playground tactic. And if the only way to defeat that tactic is for a responsible adult to declare a state of emergency, then so be it.
Find out everything you need to know about the #MintTheCoin movement below:
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