The legend of the trillion dollar coin

Once upon a time, in a mythical land surrounded by water and the sense that all hope was flowing away on that water, there was an idea. The leaders of this great land would gather in their ancient buildings and argue their ancient arguments. Each morning the storytellers of the land would go out to the people and tell of the goings on behind the grand walls of the great leaders, and the people would shake their heads, wondering when the news would be something besides "Wait a bit longer- we'll figure this out soon…"

You see, it seems that the mythical land had dug itself a bit of a very real hole, owing several trillion dollars in debt. But, the leaders of the country didn't play so well with each other all the time, and they argued about whether to pay the money they owed, or at least whether to authorize the payment of what they had already spent.

But the storytellers had found a glimmer of hope, and a twinkle of fear… the trillion dollar coin!

By now you know that I'm talking about America, and that the issue at hand is the debate over raising the debt ceiling. In short, the USA has just over $16 billion in debt. The problem is, the current debt ceiling is not much more than that. And, as you know, our debt is currently growing pretty quickly - at about  $3.85 billion a day.

Republicans in Congress are hoping to use the need to raise the debt ceiling (something that only Congress can do) as a way to get Obama and the democrats to agree to reduce some other entitlements. Essentially, they want to say that they won't authorize the U.S. to legally pay bills it already owes unless…

It's a dirty move, and more than a bit ridiculous.

Thus, the wonderfully ridiculous world of business bloggers has come up with the idea of a minting a trillion dollar coin. The logic goes that based on a 1997 law allowing the Treasury to mint coins of any value (meant to allow the printing of commemorative coins), the Treasury could then mint a $1 trillion dollar coin and walk over and deposit it in the U.S. government's account, giving them the cash to pay bills without raising the debt ceiling.

Absurd? Sure. Republicans call it catastrophic and Democrats cleverly won't rule it out entirely. I'm sure nobody has any real intent of doing that.

But if that argument is ridiculous, why isn't it equally ridiculous to even consider not raising the debt ceiling?

Is there any sense to trying to exploit the technicality that the country does not have the authorization to technically repay the money that we've already spent? Our national credit rating already dropped once because of these shenanigans; this is not the kind of position we need to be putting ourselves in at this point.

This is one of those times for both sides to put their cards on the table, then have a relatively impartial person in Washington DC come in and split the difference. Send everyone home unhappy. And solvent.

Image courtesy of DonkeyHotey via flickr