TCF Fellow Edward Kleinbard's op-ed published in the New York Times. Is there a solution that's better than minting the platinum coin? Ed Kleinbard says we could emulate California's registered warrants. He writes:
There are no great options. Most of the ideas floated so far would either severely disrupt the public markets for Treasury debt or rely on a constitutional claim of executive authority so far-reaching that we would very likely spend the next two years locked in an impeachment fight.
Some have suggested, for instance, that the president could ignore the debt ceiling and direct the Treasury to issue more bonds to cover its obligations. But the Constitution is clear, and Mr. Obama agrees, that Congress alone has the power to authorize new borrowing.
Other supposed solutions — like the notion that the Treasury Department could create a $1 trillion dollar platinum coin and deposit it in its own account at the Federal Reserve — are even more fantastical.
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.