To me this sounds more like a rouse to give Obama a stronger hand and more negotiating power for the upcoming debt ceiling fight than it does an actual solution. In other words the bark is likely much stronger than the bite, however Obama has a pretty loud bark and just the threat of something like this could cower weak Republicans:
FOX NEWS – Imagine sitting around the kitchen table, trying to figure out how you’re going to pay off that next-generation HDTV you just bought.
Then someone has an idea. Brush off one of the old checker pieces in the attic, assign it a value of, say, $2,000 — and use that newly minted “coin” to pay the credit card.
Such an absurd idea is, pun intended, gaining currency as a technically legal way for Washington to avert a looming fight over the debt ceiling. A Democratic congressman, a Nobel-winning economist and several prominent writers are now floating the idea that the Treasury Department should use obscure powers to mint a $1 trillion coin if Congress does not permit an increase in the debt ceiling.
That coin, then, could be used to pay America’s debts.
Rep. Jerrold Nadler, D-N.Y., told Capital New York that the “out of the ordinary” idea could actually work.
“I’m being absolutely serious,” he said. “It sounds silly, but it’s absolutely legal.”
Folks like Nadler point to a tiny section in the U.S. code that allows the Treasury secretary to “mint and issue platinum bullion coins and proof platinum coins” of a size and denomination of “the secretary’s discretion.” This is mainly for commemorative coins, but the idea that the provision could be exploited as an ace-up-the-sleeve for the administration was first explored during the 2011 debt ceiling fight. Now, it’s back.
UPDATE: Phillip Klein with the Washington Examiner believes a trillion dollar coin would backfire on Democrats and help Republicans:
If Obama were to listen to liberals and go the coin route instead, it would be tossing a life preserver to Republicans. Whatever economic and legal arguments liberals want to make, to a more casual observer, the idea is going to look either absurd, scary or both. Just imagine Obama publicly addressing the nation, and uttering the words, “Today, I’ve directed Treasury Secretary Tim Geithner to exercise his authority to mint a $1 trillion platinum coin.” It would not only be easy to parody — like some sort of cartoonish Scrooge McDuck scheme — it would be seen as a massive power grab by Obama that validates years of conservative attacks. It would instantly reinvigorate dispirited Tea Partiers and get more of the public on their side, because it would be much easier to argue that Obama was manufacturing money to pay off the debt he was running up than to raise alarms about what would have happened if he hadn’t taken such drastic action.
Meanwhile, if the coin proponents are wrong about the inflationary and market impacts of the action, than any resulting economic chaos would be squarely blamed on Obama rather than on the failure to raise the debt ceiling. Instead of small government ideology becoming unpopular as a result of the crisis, it would be big government philosophy that would be under fire. Instead of Obama getting to play the grownup in the room, he’d look silly. Minting the $1 trillion coin would represent such a massive in-kind contribution to Republicans that we may want to start researching whether it would violate some aspect of campaign finance laws.