As a debt ceiling standoff heats up on Capitol Hill, some Democrats are floating out-there alternatives such as a $1 trillion coin to avert a fiscal crisis and are planning how Congress can avoid another debt limit fight in the future.
Numerous times in recent days, House Speaker Nancy Pelosi questioned why the debt limit system is structured so that Congress has to take action on the debt ceiling.
“The 14th Amendment says the full faith and credit of the United States of America shall not be in doubt. For some reason, we’ve put ourselves in a situation to vote on this each year,” Pelosi said in a press conference last week. “We’ll have to examine that process.”
Pelosi also told reporters that while the current standoff has to be solved with congressional action, the Democratic caucus is exploring ways to avoid falling into a future political stalemate with the credit of the United States in the balance.
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She mentioned a bill from Democratic Rep. Brendan Boyle and House Budget Committee Chairman John Yarmuth of Kentucky that would transfer authority over setting the debt limit to the treasury secretary, which Pelosi called an “excellent idea.” Boyle has also proposed eliminating the debt ceiling altogether since hardly any other Western countries have a similar system.
“There are others — Jerold Nadler wants to have a coin, a trillion-dollar coin,” Pelosi said, referring to the New York Democrat who is chairman of the House Judiciary Committee. “That doesn’t require congressional approval. So, we’ve talked about an array of things.”
The unconventional idea to exploit a quirk in federal law to address the debt limit without wading through a divided Congress first popped up around a decade ago.
A few sentences of the law passed in the 1990s authorize the treasury secretary to mint platinum coins, aiming to give coin collectors better access to platinum U.S. coins. But the language of the statute allows the treasury secretary to mint coins of any “quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”
Some thinkers toyed with the idea as a solution for debt ceiling standoffs in 2011 and 2013: Simply mint a trillion-dollar coin, or several of them.
Nadler explained the concept to the Washington Examiner: “You mint the coin. Platinum, because of everything else. You say it’s a trillion dollars. You put it in the Treasury. And you can borrow against that trillion dollars. And that eliminates that debt limit. Just eliminates it, so you don’t have to worry about voting in Congress.”
But Nadler does not have all of the nitty-gritty details about the coin worked out. Asked whose face he would like to see on a trillion-dollar coin, Nadler said: “I don’t care. It’s irrelevant.”
Other scholars argue that the 14th Amendment may authorize the president to continue borrowing money without the thumbs-up from Congress. One section says that the “validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
The White House has reportedly circulated memos about possible debt limit workarounds in the event that Congress does not take action in time, such as continuing to make debt payments while pointing to the 14th Amendment, or even the $1 trillion coin idea. But the executive branch has publicly shut down doing anything without Congress.
“We obviously look at a range of options, and none of those options were viable, either because they wouldn’t be accepted by the Federal Reserve, by the guidance of our treasury secretary, or just by legal restrictions,” White House press secretary Jen Psaki told reporters Monday.
Senate Minority Leader Mitch McConnell is at the center of the debt ceiling fight taking place in Congress this week. He thinks the limit should be increased but wants Democrats to do it themselves. McConnell warned Democrats for months that Republicans will not vote to increase the debt ceiling so long as Democrats pursue their go-it-alone budget reconciliation spending bill of up to $3.5 trillion. Last week, Republicans did block raising the debt ceiling.
President Joe Biden and Senate Majority Leader Chuck Schumer on Monday urged McConnell not to block a procedural vote on the debt ceiling and allow Democrats to raise the limit themselves without forcing them to go through the same kind of longer budget reconciliation process that they are utilizing to pass their sweeping social spending plan. Schumer has rejected that plan, saying that he wants to send a debt limit increase to Biden this week.
Treasury Secretary Janet Yellen warned Congress that unless it takes action before Oct. 18, the U.S. will no longer pay its debts, causing “irreparable damage to the U.S. economy and global financial markets.”
Senate Majority Whip Dick Durbin on Monday floated eliminating the ability to filibuster debt ceiling votes, though that change could not be made for this current fight.
“The idea that you can filibuster the debt ceiling is an outrage,” Durbin told reporters. “That, to me, discredits the argument that the filibuster is, in fact, the way to get bipartisanship. Baloney.”
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Eliminating the debt ceiling is unlikely to get support from Republicans, who both fear an out-of-control debt and see an opportunity to use debt ceiling votes as leverage or to make a political point.
“So, we can just spend more and more?” House Minority Leader Kevin McCarthy said last week when the Washington Examiner asked about Democrats considering eliminating the debt ceiling. “It’s interesting to me that the credit cards are completely maxed out, and the answer the Democrats have is not to find a way to pay them off, but find a way to get another credit card and get a higher limit.”
