Bother - just as I finish my trillion-pixel demolition of the legal case for the Trillion Dollar platinum coin, a new dodge emerges. Prospective defenders of The Coin will simply move on to advocating for the IOU solution and there will be no surrender ceremony on the coin.
I note that Krugman had spoken up for Moral Obligation Coupons on Monday, so people have begun the MOCking already. As to the IOU plan, it does not at first blush grab me as illegal, but we will all learn more as time passes by.
I do have this quibble with Edward Kleinbard, a University of Southern California law professor and former chief of staff to Congress’s Joint Committee on Taxation who writes this:
However, there is a plausible course of action, one that the president should publicly adopt in the coming weeks as his contingency plan should debt-ceiling negotiations falter. He should threaten to issue scrip — “registered warrants” — to existing claims holders (other than those who own actual government debt) in lieu of money. Recipients of these I.O.U.’s could include federal employees, defense contractors, Medicare service providers, Social Security recipients and others.
Despite Obama's scare-mongering last summer Social Security payments ought to be covered by the interplay of the Trust Fund with the debt ceiling. Remember, Social Security assets held in the Trust Fund are counted as part of the debt ceiling. If the Trustees redeem Trust Fund assets and the Treasury pays then back by selling debt to the public then (a) debt held by the Trust Fund falls; (b) debt held by the public rises; and (c) total debt remains unchanged. (Yes, I am well aware of the lmiitations of the Trust Fund mechanism).