March 23, 2023

Treasury Will Not Mint $1 Trillion Coin to Raise Debt Ceiling

WASHINGTON — The Treasury Department said Saturday that it will not mint a trillion-dollar platinum coin to head off an imminent battle with Congress over raising the government’s borrowing limit.

“Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” Anthony Coley, a Treasury spokesman, said in a written statement.

The Obama administration has indicated that the only way for the country to avoid a cash-management crisis as soon as next month is for Congress to raise the “debt ceiling,” which is the statutory limit on government borrowing. The cap is $16.4 trillion.

“There are only two options to deal with the debt limit: Congress can pay its bills, or it can fail to act and put the nation into default,” Jay Carney, the White House press secretary, said in a statement. “Congress needs to do its job.”

In recent weeks, some Republicans have indicated that they would not agree to raise the debt limit unless Democrats agreed to make cuts to entitlement programs like Social Security.

The White House has said it would not negotiate spending cuts in exchange for Congressional authority to borrow more, and it has insisted that Congress raise the ceiling as a matter of course, to cover expenses already authorized by Congress. In broader fiscal negotiations, it has said it would not agree to spending cuts without commensurate tax increases.

The idea of minting a trillion-dollar coin drew wide if puzzling attention recently after some bloggers and economic commentators had suggested it as an alternative to involving Congress.

By virtue of an obscure law meant to apply to commemorative coins, the Treasury secretary could order the production of a high-denomination platinum coin and deposit it at the Federal Reserve, where it would count as a government asset and give the country more breathing room under its debt ceiling. Once Congress raised the debt ceiling, the Treasury secretary could then order the coin destroyed.

Mr. Carney, the press secretary, fielded questions about the theoretical tactic at a news conference last week. But the idea is now formally off the table.

The White House has also rejected the idea that it could mount a challenge to the debt ceiling itself, on the strength of the Fourteenth Amendment to the Constitution, which holds that the “validity of the public debt” of the United States “shall not be questioned.”

The Washington Post earlier published a report that the Obama administration had rejected the platinum-coin idea.

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Economix Blog: Taxing Olympic Medalists



Dollars to doughnuts.

If I get a bonus for good performance, it’s taxed. If you get a bonus for good performance, it’s taxed. Heck, when Lloyd Blankfein gets a bonus for good performance (or bad performance!), even he pays taxes on it.

But if LeBron James — who, with a total compensation of $53 million, earns more than all three of us put together, I’m willing to wager — gets a bonus for performing well in a single athletic event, well, that should be tax-exempt.

At least that is what Marco Rubio, a Republican senator from Florida, and President Obama believe.

Senator Rubio has proposed exempting Olympic medals and the cash bonuses that accompany them from income taxes. These cash bonuses, awarded by the United States Olympic Committee, total $25,000 for gold, $15,000 for silver and $10,000 for bronze.

A spokesman for Mr. Obama said the president would enthusiastically sign such legislation.

“The president believes that we should support efforts — like, I think, the bill you are referencing — to ensure that we are doing everything we can to honor and support our Olympic athletes who have volunteered to represent our nation at the Olympic Games,” Jay Carney, the White House press secretary, told reporters earlier this week.

The Olympics have long allowed professional athletes to compete. The money they earn for succeeding is earned income, just like the income I earn from my chosen profession and you earn from yours. And for some Olympic athletes who earn a medal, a lot more income usually rolls in, too, in the form of professional endorsements. Just ask Michael Phelps.

In other words, if the proposed tax exemption is rooted in the sympathy Americans have for the many lesser-known Olympic athletes who make financial sacrifices to train without ever making LeBron-level cash, these struggling Olympians are not even going to benefit from exempting medal-related bonuses.

Perhaps more important, basing tax breaks on sympathy is dangerous. The moment you designate medal-winning athletes’ personal income as somehow more nobly earned than the personal income of other workers — including, I should note, social workers, teachers, artists and others who believe they labor on behalf of the “public good” — you can end up with a whole lot of me-too-ism from other people demanding similar preferential treatment.

For this reason, Mr. Rubio’s tax proposal is a great illustration of why tax reform in the United States is so darn elusive. Every tax break sounds like such a good idea, after all!

It’s no wonder, then, that tax loopholes and subsidies reduced government revenues by around $700 billion to $1.2 trillion last year, depending on how broadly you define the term. (For context, the federal deficit was about $1.3 trillion last year.)

That said, my colleague Floyd Norris offers an alternate economic rationale Mr. Rubio could try trotting out to support his bill. See if you agree:

Such a tax provision would provide an incentive for Americans to win more medals, which would in turn lead to better television ratings and more profits for NBC. The joy over the medals would lead consumers to buy more and cause home buyers to offer to pay more.

In other words, this is the stimulus that the economy needs.

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The Caucus: Obama Plans Jobs Speech After Labor Day

President Obama plans a major speech on jobs after Labor Day in which he will lay out new proposals for jump-starting the economy and specific plans for legislative efforts to cut spending, White House officials said.

Jay Carney, the White House press secretary, said on MSNBC’s “Daily Rundown” that the president would lay out two proposals — one to jolt short-term job growth and another to guide the Congressional committee charged with deficit reduction in the fall.

“In early September, we will put forward proposals for jobs-creating ideas and economic growth ideas,” Mr. Carney said Wednesday morning. “We want to be aggressive with deficit reduction that helps pay for things you need to do in the near term to grow the economy.”

A major jobs speech by the president could help set a campaign narrative for Mr. Obama as this Republican challengers increasingly focus their attacks on his handling of the economy. Top aides to the president are eager to show that his ideas are being stymied by a recalcitrant Republican Congress.

“They are more interested in politics than they are in solving the problems,” Mr. Obama told CNN’s Wolf Blitzer in an interview Wednesday.

The speech comes amid a growing clamor from the president’s liberal base for him to be more aggressive in pushing his own jobs agenda to counter the conservative debt-cutting philosophy.

And the speech follows repeated criticism from Republicans throughout the debt fight earlier this summer that Mr. Obama has failed to lay out his own plan for turning around the economy.

The White House has said for weeks that the criticism is unfair. Every time the president has spoken publicy recently, he has laid out a series of relatively small proposals that he says Republicans have refused to act on, including trade deals and an extension of the payroll tax cut.

White House officials have said the president’s speech — to be given soon after Labor Day — will contain new ideas that go beyond those he has made in the past several weeks.

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