More praise for the magical coin: Will Obama mint a $1 trillion platinum coin? We’ll guess that’s extremely unlikely.
Should Obama mint such a coin? Yesterday, in another blog post, Paul Krugman kept saying yes. In our view, Krugman’s assessment of this matter is remarkably limited:
KRUGMAN (1/9/13): I feel comfortable in my understanding of the economics of the platinum coin, but don’t claim any legal expertise. However, Laurence Tribe knows whereof he speaks—and he says that it’s quite legal. And so there you have it: if we have a crisis over the debt ceiling, it will be only because the Treasury department would rather see economic devastation than look silly for a couple of minutes.Laurence Tribe says the coin would be legal. (To read Tribe’s e-mail, click here.) In Krugman’s view, that pretty much closes the deal.
The coin is legal, and it would let Obama keep paying the nation’s bills. “And so there you have it,” Krugman concludes. If we have a crisis over the debt ceiling, it will only be because Obama doesn’t want to “look silly for a couple of minutes.”
That’s an astonishing piece of analysis. It represents a thoroughly blinkered approach to the affairs of the world.
What would happen if Obama minted this magical coin? Lacking a magical crystal ball, we can’t precisely tell you. But in Krugman’s analysis, this question barely exists:
Obama might look silly for a few minutes. That’s the worst thing Krugman imagines.
In his e-mail, Tribe offers a “bottom line” on this question. “This is a situation,” he says, “where the political and economic considerations, not the legal considerations, have to drive the decision-making.”
In that statement, Tribe acknowledges that political considerations come into play in this matter. Krugman seems to have little idea what that statement might mean.
In this morning’s New York Times, Edward Kleinbard rejects the trillion dollar coin as a “fantastical” notion. He then recommends “a plausible course of action:”
Obama should issue “IOUs” (“scrip”) to those he cannot pay!
“The strategy may sound far-fetched,” Kleinbard says, “but it has been used before: in fact, California relied on it as recently as 2009.”
Kleinbard goes on to describe this approach as performed in California. It represents a perfectly sensible type of Rube Goldberg machine—a sensible approach for a nation which can no longer function.
Whatever! In all these discussions, we continue to be struck by the dog that doesn’t yelp or howl. We see no one wondering how Obama might persuade the public that the debt limit has to be raised.
Could liberals actually go to the public and win a public debate? The possibility doesn’t seem to enter our liberal heads! In the current case, this is especially strange, since many major business interests, not being crazy, don’t want to go down the road of default or its’ like again.
Could Obama go to the public and win? We liberals don’t even seem to consider that possibility. It doesn’t seem to enter our heads that we could state a case in the public square and come away with a win.
Mitch McConnell hasn’t strapped his dog to the roof of a car! His wife doesn’t own dressage horses—and plus, she’s Asian-American! There’s no way we liberals can win a case when faced with those disadvantages.
For ourselves, we’d be inclined to offer an unflattering explanation for our tribe’s rather blinkered approach. It’s been a long time since the liberal world actually tried to talk to the public.
In all honesty, we have no pre-existing forums we could use in the current absurd situation. We have very little political capital on which we can hope to draw.
How do we liberals regard the public? In 2009, Rachel Maddow spent more than a week issuing nightly dick jokes at the public’s expense, while pretending to be embarrassed by this thing she found herself doing. Not much later, Keith Olbermann began inviting Janeane Garofalo to explain that the limbic brains of the public don’t seem to be working correctly.
Movements which think of the public that way—and we do—may find themselves in our current predicament. They may find themselves unable to argue and win, even when they get to argue the easiest case in the world.
They may find themselves reading posts by leaders who have an amazingly limited view of what goes on in the actual world.
We liberals are a helpless breed. We’re supremely dumb, and yet we insist that we’re the smart, nuanced, open-minded tribe of people. More on this self-portrait tomorrow—but for today, alas:
As history has shown us again and again, conservative leaders like Grover Norquist can argue The Crazy for decades and win. We can’t argue the easiest case in the world, even when we have the backing of powerful interests.
Will Obama mint the magical coin? Or should he simply issue that scrip?
We have no forums from which we can talk to the public. And so we ask questions like this.
Tomorrow: We return to our current award-winning series. Our text for tomorrow:
MOONEY (page 71): But within the conservative fold, there is one group that exhibits the traits just discussed—closed mindedness, low integrative complexity, very low Openness—to an extent that is hard to say anything good about: so-called authoritarians. They’re not all conservatives, but they’re surprisingly prevalent in the United States.You’re right—that last sentence is a bit hard to parse. Tomorrow, we’ll learn that “nearly half the public” seem to be “so-called authoritarians!”
Just a guess: People who toss off such claims in such casual ways will tend to end up just like us.
Imagining that what needs to happen is convincing "the public" that the debt ceiling must be raised is delusional.ReplyDelete
"The public" don't get to meaningfully decide this.
Also, why is it so important (to the Howler) that, if it came to pass, Obama be able to "explain" to the public why a platinum coin avoidance of the debt ceiling was needed?Delete
People might be upset?
Remember 2008? Before the election Obama was explicitly against the Bush admin's illegal warrantless telco mass surveillance program.
What happened next? President Obama angered many by doing a 180, and agreeing that the telcos should be retroactively immunized for anything criminal they may have done.
Nah, just screw anybody who cared as unwilling to join Obama in "looking forward, not behind."
Not to worry Bob. The moral is: Obama knows what really matters, and it ain't anything stupid like the people, or the constitution. He's not gonna mint any coins.
It we're going to hit the ceiling, Obama's going to fold like a cheap suit, cutting "entitlements" left and right -- just as he's always wanted to do for his real bosses all along.
Regarding your statement that Obama was opposed to "the Bush admin's illegal warrantless telco mass surveillance program," I believe you are in error on this point. Obama voted for the FISA Amendments Act of 2008, if this is the legislation to which you refer. Hillary Clinton voted "No."Delete
"In October 2007, Obama spokesman Bill Burton issued this unequivocal statement to the liberal blog TPM Election Central: "To be clear: Barack will support a filibuster of any bill that includes retroactive immunity for telecommunications companies."Delete
"Obama's campaign did not respond to our request for comment. But in this case, it's clear that the McCain campaign's accusation of a flip-flop is True. "
In December 2007: "Senator Obama unequivocally opposes giving retroactive immunity to telecommunications companies."Delete
So, yes, it was a huge shift by Obama. The original post only has the timing wrong: It was after the Dem primaries were over that Obama completely changed course on telco immunity.
And of course, as President, Obama has proved quite nimble both at seizing new powers for the Presidency and locking in the powers seized by his predecessors.
You should check out Atrios recently as well. His argument is basically "well, a trillion dollar platinum coin is no sillier than a $100 paper bill which buys $100 worth of goods and services".ReplyDelete
In other words, why is minting a "$1T platinum" coin "Silly"? Just because you say so? Monetary (and more generally, fiscal) policy is extremely complicated. Talking about things in theory and being a wonk is Paul Krugman's modus operandi. Why are you surprised? It's not his job to do everything you want him to do. Just like each political candidate is not going to believe in exactly what you believe in even if you are a "liberal" or a "conservative" or whichever word you identify with.
Of course, your modus operandi is riding a high horse from time to time. So perhaps I shouldn't be surprised either...
... and his argument is wrong, from a number of points of view. Think about it: no one is talking about the treasury issuing a trillion in negotiable paper currency to pay the government's bills. This is *because the treasury is legally constrained from doing so*.Delete
The question is: how are liberals going to explain to the public that the Magic Coin is not a gimmick to get around the very law that prevents the government from issuing unlimited amounts of currency? How will they counteract conservative claims that Obama is "debasing the currency"? Hint: they won't be able to, any more than they've been able to explain that no, ObamaCare does not mandate "death panels". About 2 out of 5 Americans believe this.
Sorry, Bob's right on the platinum money on this one. The Magic Coin is political suicide, and all the liberal jokes about who will be on the face of the coin won't change that. The energy going into mooting it would be far better spent on dreary old politics - the kind the people with the right kind of limbic system can't seem to master. Perhaps there is a link between a certain kind of limbic system and laziness?
And in point of fact, it's Krugman who thinks the Magic Coin will be merely "silly" - and then only for "a couple of minutes". Of course, he has also explained that the debate is really a debate about "epistemology". How many voters do you suppose you win (or lose!) every time you use the word "epistemology" in a debate about public policy?
His (Atrios) point isn't about the coin, per se, it's about the idea that money is goofy, in itself. Not that minting the coin would be similar to printing money. You are missing my point entirely.Delete
Liberals always lose the messaging war. I get that. I understand Bob thinks they should message better. But Krugman is not for messaging. He is a wonk. If Bob wants to be the liberal brand manager, then I don't see him clamoring for the job. Go work with Howard Dean or Nancy Pelosi or the DNC or something if you really want to advocate for the Democratic Party, but if not, just calm down dude. It's not a big deal.
Just 70 years ago Germans thought the Jews should all be killed. Yes, the human populace has advanced since then. Seriously, it has. Finding nuggets of anti-wisdom and complaining about them incessently is quite wasteful, that's all I'm trying to say.
Yabut Krugman plainly isn't a just a "wonk". He has written a number of books with decidedly non-wonky, polemical titles such as "End This Depression Now", and "The Conscience of a Liberal" and so on. He plainly believes he has a pulpit, and he generally uses fairly well (though I wish he'd lend it to Dean Baker, who explains things much more clearly and directly, and regularly calls out buffoons like Brooks by name, which the niceties of the NY Times style book forbids). But on this subject he's off in the weeds, along with sophisticates who think they can point at the stuff in average American's wallet and call it "goofy" (you know, on epistemological grounds) and expect to win in politics.Delete
You are right, we should all calm down - dude - because it's *not a big deal*. Behold! the demolition of middle class and the evaporation of a living wage for workers in the last 40 years proves that. At least the Germans have dropped the Jew-killing.
As Bob once remarked, the dead of Iraq stare up at us.
Oh, found something you have been searching for:ReplyDelete
On the subject of making the case to the public, as far as I can see, the Republicans are demanding, as a condition for a deal, cuts in spending (but not to defense spending) and cuts in "entitlements" but fail and refuse to offer any specifics. It could be I'm missing something, but I read article after article about their demands for cuts, with no specifics about which specific cuts they are asking for, and certainly no discussion about what the effect of the cuts would be. They want to cut the deficit by reducing spending and not increasing (if they had their way even reducing) taxes. It seems to me that this is a basic point the liberal "tribe" should be making, but seems to ignore.Delete
Not really relevant to your post, but relevant to your blog:ReplyDelete
After Jared Bernstein endorsed Chained CPI in Sept. 2011, I thought we might be moving towards manufactured consent on Chained CPI. Since then, things have only grown more ominous.
My question, which to me is perfectly logical: Those in favor of Chained CPI argue that it's a "more accurate" measure of inflation. (Whatever that means.) However, those towards the left who favor chained CPI (like Bernstein and the CBPP) argue that a birthday bump may be necessary for disability beneficiaries and longer lived seniors. But if Chained CPI is more accurate, why are birthday bumps necessary?
The reason these questions aren't coming up may be that Democratic aligned folks are carrying are carrying water for those in power. (People forget that Obama included Chained CPI in his FY 2012 budget released last February. Which is why he offered it in negotiations over the fiscal cliff. He'd already ceded that ground in his budget.)
The simplest solution is for Obama to cite the 14th Amendment and just have the treasury issue more debt. Simple solution. So it will end up in front of the SCOTUS at some point. Does anyone think a majority of the court would actually rule that Congress has the right to commit spending but then refuse to allow the borrowing to meet the commitments?ReplyDelete
I have no doubt that the trillion dollar coin is legal, for all practical purposes. For better or for worse, we have evolved into a government where the President has almost unlimited powers if he chooses to use themReplyDelete
If Obama minted the coin, the Courts wouldn't act. I don't even know who's have standing to sue. All Congress could do would be to impeach the President, which obviously isn't going to happen.
A parallel was GWB's decision to give TARP money to auto companies. That was plainly illegal, since the TARP law specifically said it was only for financial companies. Nevertheless, Bush got away with it.
Maybe it's not legal. A commenter on Ann Althouse's blog apparently quoted the law and provided some explanation:Delete
"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. [Emphasis added]"
From the US Mint:
"A bullion coin is a coin that is valued by its weight in a specific precious metal."
So it would appear that a new platinum coin would have to be valued based on the amount of platinum. It couldn't be given an arbitrary value of a trillion dollars.
I love it; a troll arguing with him/herself.Delete
Yeah, and he's wrong taboot.Delete
Per the US Mint itself: "Although their face value is largely symbolic, it provides proof of their authenticity as official U.S. coinage."
The denomination (the value as *currency*) is not directly related to the value of the metal as metal.
The Mint is perfectly happy to sell platinum coins that have a value as currency of $100 for upwards of $1000.
The law, David, requires the coin to be made of bullion, (and it will not be sold for less than its metal value) but the denomination of the coin can be (and always is) entirely unrelated to the metal content.
There is no legal impediment to the denomination being whatever " the Secretary, in the Secretary's discretion, may prescribe."
Of course, he reads Ann Althouse's blog to understand the world, so there really is little hope for him.Delete
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