The Magic Coin Solution
I love this. A Yale law professor has pointed out an obscure law that allows the president to mint as much money as he likes, so long as it is in the form of platinum coins. Obama, therefore, could, if he so wanted, order the minting of two $1 trillion coins, deposit them in the Federal Reserve, and use them to pay debts. Ironically, it would not even cause inflation, though it could cause a loss in investor confidence and prompt foreign governments to devalue the dollar.
Balkin’s post takes the form of an imaginary discussion between Obama, Biden, Reid, and Geithner. It’s fun to read.
However, Obama probably won’t do it. I have a feeling that he will absolutely try for a compromise first, even if it’s a cave; but if Republicans are so stupid or inept that a default would be imminent, I have the feeling that Obama would probably invoke the Fourteenth Amendment sooner than make the coins or “sell” federal land. He would likely do it as a backstop measure to temporarily set back the default until a deal can be reached. This seems likely to me because Obama appears to be almost unreasonably intent on making deals rather than doing the smart thing or the right thing unilaterally.
Still, it’s nice to imagine the platinum coin move. It reminds me of the fictional move in that one episode of The West Wing where Josh figures out that the president can side-step a Republican strip-mining amendment to an essential banking bill by using the Antiquities Act to declare the site a national park. (In actuality, that act allows him to create national monuments, not parks, but the effect would be the same.)