The trillion-dollar coin is a concept that emerged during the 2011 United States debt-ceiling crisis as a proposed way to bypass any necessity for the United States Congress to raise the country's borrowing limit, through the minting of very high-value platinum coins. The concept gained more mainstream attention by late 2012 during the debates over the United States fiscal cliff negotiations and renewed debt-ceiling discussions, and reached the headlines during the week of January 7, 2013. The Federal Reserve and the Treasury ultimately rejected use of the trillion-dollar coin concept.
Congresswoman Rashida Tlaib reintroduced the concept of the trillion-dollar coin in March 2020 in the form of a congressional proposal"Automatic BOOST to Communities Act" Proposal. during the shutdown caused by the COVID-19 pandemic in the United States. Tlaib sought to fund monthly $2,000 recurring stimulus payments until the end of the pandemic.
The idea gained further traction in late 2021 with propositions by Bloomberg journalist Joe Weisenthal among others, amid the 2021 United States debt-ceiling crisis.
Legal basis
The issuance of paper currency is subject to various accounting and quantity restrictions that platinum coinage is not. According to the United States Mint, coinage is accounted for as follows:United States Mint FY 2013 President's Budget Submission United States Department of the Treasury Since Fiscal Year (FY) 1996, the Mint has operated under the United States Mint Public Enterprise Fund (PEF). As authorized by Public Law 104-52 (codified at ), the PEF eliminates the need for appropriations. Proceeds from the sales of circulating coins to the Federal Reserve Banks (FRB), bullion coins to authorized purchasers, and numismatic items to the public and other customers are paid into the PEF and provide the funding for Mint operations. All circulating, bullion and numismatic operating expenses and capital investments incurred for the Mint's operations and programs are paid out of the PEF. By law, all funds in the PEF are available without fiscal year limitation. Revenues determined to be in excess of the amount required by the PEF are transferred to the United States Treasury General Fund as off-budget and on-budget receipts. Off-budget receipts consist of seigniorage, the difference between the receipts from the Federal Reserve System from the sale of circulating coins at face value and the full costs of minting and distributing circulating coins. Seigniorage is deposited periodically to the General Fund where it reduces the government's need to borrow.
The concept of striking a trillion-dollar coin that would generate one trillion dollars in seigniorage, which would be off-budget, or numismatic profit, which would be on-budget, and be transferred to the Treasury, is based on the authority granted by Section of the United States Code for the Treasury Department to "mint and issue platinum bullion coins" in any denominations the Secretary of the Treasury may choose. Thus, if the Treasury were to mint one-trillion dollar coins, it could deposit such coins at the Federal Reserve's Treasury account instead of issuing new debt.
31 U.S.C. 5112(k) as originally enacted by Public Law 104-208 in 1996: The Secretary may mint and issue bullion and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time.
In 2000, the word "bullion" was replaced with "platinum bullion coins". According to the United States Mint: "A bullion coin is an investment-grade coin that is valued by its weight and fineness of a specific precious metal."“United States Mint Bullion Coins”, United States Mint Retrieved 6 May 2023.
Platinum bullion coins can, by this statute, be minted in any denomination, whereas coins in any other specified metal are restricted to amounts of $50, $25, $10, $5 and $1. The concept of minting a very high denomination coin relies on the platinum clause as a loophole for the executive branch to raise revenues without congressional oversight.
Philip N. Diehl, former director of the United States Mint and with Republican Congressman Michael Castle co-author of the platinum coin law, has said the procedure would be permitted by the statute. Castle says he never intended such a use. The platinum coinage provision was eventually passed by a Republican Congress over the objections of a Democratic Treasury in 1996.Matthews, Dylan (January 4, 2013). Michael Castle: Unsuspecting godfather of the $1 trillion coin solution, The Washington PostPillifant, Reid (January 4, 2013). A trillion-dollar-coin idea takes off, and a former head of the U.S. Mint doesn't see why it shouldn't , Capital (New York)McAllister, Bill (November 29, 1996). , The Washington Post
Laurence Tribe, a constitutional law professor at Harvard Law School, said the legal basis of the trillion-dollar coin is sound and that the coin could not be challenged in court as no one would have standing to do so.
Emergence of the concept The idea for the Treasury Department to mint a coin and send it to the Federal Reserve to pay off the debt was first popularized by Populist Party presidential candidate Bo Gritz in 1992. As a standard part of his stump speeches, he would hold up a five-inch example coin. The specific concept was first introduced by Carlos Mucha, a lawyer who commented under the name "beowulf" on various blogs. "Beowulf" outlined the idea in a series of comments on Warren Mosler's blog in May 2010, noting that "Congress has already delegated to Tsy [Treasury] all the seigniorage power authority it needs to mint a $1 trillion coin".Marshall's latest moslereconomics.com Beowulf also drew attention to the concept on the blog of economist Brad Delong in July 2010"beowulf" (July 6–8, 2010). "A (Keynesian) Voice Crying in the Wilderness, Saying..." Brad DeLong blog comment and in a legal analysis blogpost of his own in January 2011,"Coin Seigniorage and the Irrelevance of the Debt Limit". Firedoglake, January 3, 2011 but it was not until July 2011 that the use of the concept as an unorthodox method of resolving the debt-ceiling crisis came to the attention of the financial press and mainstream media blogs.Plumer, Brad (July 30, 2011). "Can a giant platinum coin save our credit?" The Washington PostHayden, Erik (July 29, 2011). "A $1 Trillion Coin Seems Like a Nice Idea". Atlantic Wire(July 29, 2011). "So crazy it just might work: The trillion-dollar coin solution". The Economist(July 7, 2011). "Let's End This Debt Ceiling Debate with a $1 oz. $1T Coin". Pragmatic Capitalism At that time, the idea found some support from legal academics such as Yale Law School's Jack Balkin.Balkin, Jack M. (July 28, 2011). "3 ways Obama could bypass Congress". CNN Once the debt ceiling crisis of the summer of 2011 was resolved, attention to the concept faded.
The concept gained renewedWeisenthal, Joe (January 3, 2013). "UPDATE: Suddenly, Lots Of Influential People Are Talking About The Trillion Dollar Coin Idea To Save The Economy". Business InsiderWeisenthal, Joe (December 5, 2012). "The Debt Ceiling Is Coming Back, And People Are Talking About The Infamous 'Trillion Dollar Platinum Coin' Solution". Business Insider and more mainstreamCarney, John (December 6, 2012). "The Trillion-Dollar Coin Is Back". CNBCKrieg, Gregory J. (January 4, 2013). "Trillion Dollar Coins: The Ultimate Debt Ceiling End-Around?". ABC News attention by late 2012, as the debt-ceiling limit was being approached again. In early January, the economist Paul Krugman endorsed the idea and asserted that opposition to the idea was coming from people unwilling to admit the truth that "money is a social contrivance". His endorsement attracted considerable media attention. Former Mint director Diehl was widely cited in the media debunking criticisms of the coin and its basis in law. Congressman Jerry Nadler endorsed the idea,Pillifant, Reid (January 2, 2013). "Looking to the next debt-ceiling fight, Nadler proposes a trillion-dollar coin trick". Capital (New York) and it was featured in the international press by January 4, 2013.(January 4, 2013). "Der Trick mit der Eine-Billion-Dollar-Münze". Süddeutsche Zeitung (in German)Weisenthal, Joe (January 4, 2013). "The Huffington Post Does A Massive Front-Page Endorsement Of The Trillion Dollar Coin Solution". Business Insider
"Beowulf" would later tell Wired magazine that the coin idea came from a December 2009 Wall Street Journal article that talked about how several people generated frequent-flyer miles at no cost by ordering coins from the U.S. Mint with a credit card offering mileage rewards, then depositing the coins at a bank to pay off the credit card debt.McCartney, Scott (December 7, 2009). "Miles for Nothing: How the Government Helped Frequent Fliers Make a Mint". The Wall Street Journal He also said that he was inspired by the 2008 book Web of Debt by Ellen Brown, which cited a former Washington official who said the government could order the minting of large coins to pay off the national debt. "Beowulf" said the trillion-dollar coin idea is more rightly attributed to a small discussion group than to an individual, adding that the group was "just in it for the lulz" (i.e., for personal amusement).Tate, Ryan (January 10, 2013). "Meet the Genius Behind the Trillion-Dollar Coin and the Plot to Breach the Debt Ceiling". Wired
Analysis and reaction Some commentators have argued that although the concept may be strictly legal, it would weaken the checks and balances system of U.S. government, even if the spending that the coin would allow was already authorized by Congress. Opinion columnist Megan McArdle wrote that "minting a $1 trillion coin neatly end-runs GOP obstructionists, but only by proving that the president himself has little respect for the institutional restraints on his office." Felix Salmon, another journalist, wrote that the concept "would effectively mark the demise of the three-branch system of government, by allowing the executive branch to simply steamroller the rights and privileges of the legislative branch." Salmon said that he does not agree with what Congressional Republicans are doing, but that they have a right to do that, and that the president should not use the trillion-dollar coin option to circumvent them. He said, "Yes, the legislature is behaving like a bunch of utter morons if they think that driving the US government into default is a good idea. But it's their right to behave like a bunch of utter morons."
On the other hand, many economists and business analysts endorsed the coin as a way to counter threats by congressional Republicans to force the country into default by refusing to raise the debt limit. Paul Krugman said (in 2013), "So minting the coin would be undignified, but so what? At the same time, it would be economically harmless – and would both avoid catastrophic economic developments and help head off government by blackmail." He also declared the trillion-dollar coin debate to be "the most important fiscal policy debate of our lifetimes".
Michael Steel, spokesperson of House Speaker John Boehner, dismissed the concept by comparing it to a Simpsons episode called "The Trouble with Trillions", which aired 13 years before the 2011 United States debt-ceiling crisis, in which Homer Simpson is on a mission in search of a missing trillion-dollar bill.