the law and unintended consequences: How the GOP just ok'ed the trillion dollar coin

So in my last post I made reference to what I called the "Platinum Plan" a admittedly kinda insane plan favored by a few democrats that would allow the president to mint a trillion dollar platinum coin and use it to pay off the deficit. This way with the deficit paid off we would no longer be near hitting/hitting the debt ceiling so there would be no need for a debt ceiling raise, thereby removing the upcoming debate the GOP seems to be hinging all their goals on (cause that worked out so well for them last year....just saying).

Now I admit its a crazy sounding and silly plan that I personally dont think would ever be taken seriously by anyone who could even possibly come close to being half serious about any finical issues at all. Course then Paul Krugman endorsed the idea over in the New York Times so what do I know?

The thing is, dealing with crazy sounding and silly threats that dont actually exist is what the GOP is best at (laws banning sharia law being used, voter id laws to stop non existence in person voter fraud, ect) so they are ALL OVER this thing like ban tanning lotion on Speaker Boehner.

Which brings us to congressman Greg Walden of Oregon, who is introducing a bill that would expressly make it illegal to mint platinum trillion dollar coins to pay down the debt.

Here's the catch.....you dont need to pass a bill outlawing something that is already illegal (hence the reason all the anti sharia laws tend to get tossed out it court, its already illegal). So by introducing the bill Congressman Walden has basically just admitted that he at least currently considers it perfectly legal to mint a trillion dollar coin otherwise there would be no need to ban something that is already illegal. The same will be true for any one else who co-sponsors or votes yes on this particular bill.

Now before I go any farther I want to point out, this isnt some crack pot idea or technical loophole I made up, my source for this is from Business Insider, so its not like its me pulling a gotcha.

Now see at the moment federal law grants the power to min gold silver copper and paper money exclusively to the Federal Reserve. But the various coinage acts passed over the years (especially in the times between central banks) gave to power to mint all money to the US treasury Secretary.

As it stands the US code of laws currently still includes this passage:

"(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time"

Now of course that still doesnt allow the printing of money to pay down to expressly pay down the debt, in fact in theory thats legally barred.

See article 1 section 8 of the Constitution says

"The Congress shall have power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;"

So only congress can pay off the debt. Its one of their enumerated powers.

But when added to the 14th amendment which reads in part this:

"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. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."

Which means it is directly unconstitutional to not pay our debts (the end result of not raising the debt ceiling) and it is soley the jurisdiction of the executive branch to enforce the Constitution according to the balance of power.

Which means the president is legally obligated to pay the debt. The question becomes does the 14th amendment overwrite in that instance (congress being unwilling to pay to debt) Article 1 Section 8?

Now I'll be honest, who knows. Normally I suppose the president would do it and congress would sue and it would go to the supreme court and they would decide, as usually happens in these kinds of cases (the Constitution says two different things)

Of course the fact that the payment could be voided (on the claim the president never had the power to do it) after the fact, means it wouldnt likely be accepted as a payment by our debt holders as its not secure, thereby making a de facto ruling in favor of the idea congress alone can pay down the debt.

This presumably is the reason behind the reluctance of the Obama Administration to evoke the 14th amendment, they have at best a 50/50 chance of winning, which isnt enough for a secure payment.

But then we get to Rep Walden's bill. By admitted that minting platinum to pay down the debt should be made illegal, he is therefore agreeing that at the moment is is, and that, therefore at the moment the 14th amendment DOES supersede article 1 section 8.

And this is a key admission/problem. See Rep Walden's bill will not become law. The senate will kill it if nothing else. (although personally I dont think it will even pass the house). But everyone who votes FOR the bill accepts the framing of the bill, that is it is currently legal for the president to print platinum money to pay down the debt.

Which may make the president a lot more likely to actually do so, as during the inevitable court case the President could point to Walden's bill and the sizable minority or even majority of house republicans who supported it as proof that between those republicans and the democrats everyone agreed he HAD the power to do this at this moment.

Making it much more likely the president will either win, and keep the power for good, or that if he loses it will be "from that point forward" meaning it wont be allowed to happen NEXT time, but the ban on Ex Post Facto law would prohibit the ruling from being retroactive, as they is now agreement he at the moment HAD the power to do it. So any payment with platinum money would be secure and possibly accepted by our debt holders.

So to sum up, oddly by trying to stop a solution the president has currently refused to embrace the GOP may have just laid the groundwork to give cover to the president to use the very solution they are trying to prevent.

Consider it the law of unintended consequences.