The Trillion Dollar platinum coin is riding a wave of coverage today, demonstrating yet again that stupidity can circle the world three times before common sense can put its boots on.
Two of the sillier arguments: Joe Wiesenthal of Business Insider declares that the new bill by Congressman Walden to bar this ploy implicitly legitimizes the current interpretation:
We've posted his full press release below, but the key thing here is that the idea is now legitimized, as a GOP Congressman implicitly acknowledges that the coin idea is currently legal.
We have not seen the language of the bill yet but it will probably amount to a clarification of the existing Treasury authority to mint platinum coins subject to the same framework that already applies to silver and gold coins.
The key constraint is that Treasury must sell coins for their bullion value (plus a reasonable premium to cover striking, marketing and administrative costs). Language asserting that Congress always intended just that hardly equates to an admission that Congress meant something else. It does admit the possibility that the current law is subject to misinterpretation, but that is still a long way from declaring the misinterpretation to be "currently legal".
The second failure of common sense is the notion that Obama can proceed safely here because literal interpretations of the law will only blow up in Republican faces. Really? As we speak, a court fight over a glaring drafting error in ObamaCare is percolating:
Critics say the law allows subsidies only for people who obtain coverage through state-run exchanges. The White House says the law can be read to allow subsidies for people who get coverage in federal exchanges as well.
The law says that “each state shall” establish an exchange. But Washington could be running the exchanges in one-third to half of states, where local officials have been moving slowly or openly resisting the idea.Can we hear from an Obama supporter? Yes We Can!
Prof. Timothy S. Jost, an expert on health law at Washington and Lee University, said Congress had made “a drafting error” that should be obvious to anyone who understands the new health care law.
“There is no coherent policy reason why Congress would have refused premium tax credits to the citizens of states that end up with a federal exchange,” said Mr. Jost, who supports the law.
A drafting error! It's almost analogous to the Trillion Dollar Coin situation, except totally different because liberals progressives are on the other side. Well, and Congressional intent is probably a lot more ambiguous, since Federal benefits such as block grants administered by the states (welfare, Medicaid) have a real history and fan base in Congress.
Kevin Drum continues with his 'Do The Right Thing' approach in which he exhorts his fellow travelers to embrace the rule of law, not men. Good luck - next he will want the War Powers Act to be enforced, or something.
Lots more links at Memeorandum. I will offer this free legal advice from a non-lawyer:
Congressional intent in adding the language about platinum was crystal clear - they wanted Treasury to have authority to sell collectible coins for their bullion value, as was being done with silver and gold. So where this Trillion Dollar coin idea fails will be in the matter of the Secretary's discretion:
What, a court may reasonably inquire, does "the Secretary's discretion" actually mean? Can the coin include obscenities? Political slogans? "Bush 2004!"? "Platinum Change You Can Believe In"? I suspect a court would find that the Secretary's discretion in terms of design would be viewed as limited by factors outside of paragraph (k) quoted above.
More importantly, with other coins the Secretary has discretion to set denominations for gold and silver coins subject to the rule about selling the coin at its bullion value, and subject to overall limitations on the stock of coins and currency in circulation. Maybe a court will decide that since the Congress does not re-specify the exact nature of the Secretary's discretion each time they use the phrase, that discretion is unlimited. Maybe! But I doubt it.
As a practical matter, if (IF!) Obama wanted to proceed with this, Turbo-Tax Tim Geithner would sit down with some Treasury lawyers and try to get them to opine that the Trillion Doillar coin was within his discretion. After the laughter died down maybe an Administration lawyer would agree to fall on his word processor and deliver the necessary blessing. But that wouldn't end the drama.
Over at the Fed, their lawyers would be asked to opine on whether Treasury can really do this, because if not, the Fed obviously cannot be writing Trillion dollar checks for $1000 worth of platinum. Pushing those lawyers to compromise the Fed's independence won't be easy, and playing along with this sort of potentially inflationary gambit that is beyond the control of the Fed is hardly something the Board of Governors will be eager to get behind.
So - this scheme has legal obstacles and a legal foundation that will collapse the first time a judge gets a look at it. There is no way it can be done quickly, and almost surely not secretly either (unhappy opponents will leak word of the discussions).
But keep thinking...