Debt Creativity Includes ‘Mint the Coin,’ Gazillion Dollar Limit

A $1 trillion coin, a “gazillion” dollar debt limit, and removing Congress from the equation are among Democrats’ proposed solutions to the debt ceiling standoff, in a wellspring of creativity inspired by Republicans’ insistence that Democrats increase the limit on their own.

The federal government is likely to reach the debt limit by Oct. 18, Treasury Secretary Janet Yellen said Tuesday. If lawmakers can’t raise or suspend the debt ceiling, the federal government would likely default on payments, which would have catastrophic consequences, Yellen has warned.

Democrats insist Republicans join them in a bipartisan vote to suspend the debt limit. Senate GOP leader Mitch McConnell (R-Ky.) has promised repeatedly that won’t happen, and says Democrats should use the budget reconciliation process to raise the debt limit without Republican votes.

Democrats have balked at the prospect of a party-line vote on a roughly $30 trillion debt limit. Now, House Budget Chair John Yarmuth (D-Ky.) says there’s not enough time to amend the reconciliation instructions, an assertion Republicans say is false.

Given the time crunch, even seemingly far-fetched ideas appear more preferable to Democrats than the GOP proposal that they raise the limit alone through the reconciliation process.

Photographer: Scott Eells/Bloomberg

A sign in a U.S. Mint facility in Philadelphia.

‘A Gazillion Dollars’

Key Democrats favor an outright elimination of the debt limit. But if they are forced to act alone, the rules of the reconciliation process only allow lawmakers to change the debt limit to a different number, which has inspired some members to propose an increase to a high figure that may be impossible to reach.

“I’m for either eliminating the law or raising the debt limit to a gazillion dollars,” Yarmuth told reporters Tuesday.

Yarmuth said he’s made the suggestion to Speaker Nancy Pelosi (D-Calif.), but House Democrats haven’t had a serious, caucus-wide discussion about it. It’s unclear how much support the idea would get, because “I don’t think anybody thought the Republicans would be so irresponsible,” Yarmuth said.

Other Democrats have also called for the elimination of the debt limit. Senate Finance Chairman Ron Wyden (D-Ore.) said he’d support an end to the issue “because it is a contrivance,” he told reporters Monday. “It is an invented issue for scoring points.”

‘Mint the Coin’

Outside of acting through reconciliation or getting Republican votes, Democrats in Congress have few options, Yarmuth said Tuesday.

“We all know what the options are,” he said. “Mint the coin, ignore the law, let the president just pay the debt, have the Fed use extraordinary measures, or use reconciliation. Reconciliation, there’s a time constraint. That’s the problem.”

“Mint the coin” refers to the idea that the secretary of the Treasury can mint a $1 trillion platinum coin, purchase $1 trillion from the Federal Reserve, and retire that debt, effectively delaying the debt limit deadline. The idea became a popular slogan during the 2011 debt limit crisis, though the Obama administration decided against the plan.

Rep. Jerry Nadler (D-N.Y.) raised the idea in a House Democratic caucus meeting on Tuesday, Pelosi told reporters.

“Jerry Nadler wants to have a coin, a trillion dollar coin, that doesn’t even require a congressional act,” Pelosi said. “So we talked about an array of things. But right now, we have to raise the debt ceiling.”

Pelosi has also cited the 14th Amendment to the Constitution, which stipulates that the validity of the public debt “shall not be questioned.” Pelosi declined to say if Democrats would rely on a constitutional interpretation that would eliminate the need for an act of Congress.

“No, the point is, it’s in the Constitution,” Pelosi said Tuesday. “We really do not have to go through this all the time.”

A Bipartisan Overhaul

If Democrats can’t rally around an impossibly high debt limit, they may try to get Republicans to join them in putting the authority in the hands of Yellen.

Rep. Brendan Boyle (D-Pa.) said he’ll introduce a bill this week that would allow the Treasury secretary to increase the debt limit on her own. Congress could block that action by passing a bill through both chambers and getting the president’s signature, but lawmakers wouldn’t have to consistently raise or suspend the debt limit, he said.

Boyle said he thinks the proposal—which would need 60 votes in the Senate—could garner votes from Republicans who don’t want to raise the debt limit, but who might not mind giving the authority to the executive branch.

“I do believe there’s a path to getting 60 votes in the Senate—including from some people who would not want to raise the debt limit, but might be comfortable saying, ‘I’m not voting to raise the debt ceiling, but if a Democratic administration’s Treasury secretary wants to do it, that’s on them,’” Boyle said in a Tuesday phone interview.

But that proposal would be similar to eliminating the debt ceiling, at least in terms of Congress’s authority. Yarmuth, a cosponsor, said he doubts it will earn Republican support.

‘The Law Says We Have a Debt Limit’

Republicans have argued the debt limit serves a purpose because it forces lawmakers to have a bipartisan conversation about the debt and deficit. But this year, there haven’t been negotiations, and Republicans have declined to make any legislative proposals.

The lack of negotiations “raises the question of what is the value of having a statutory debt limit,” said Bill Hoagland, a senior vice president at the Bipartisan Policy Center and a former Republican staff director of the Senate Budget Committee.

“They’re asking for one thing: They don’t want their fingerprints on raising it,” Hoagland said of Republicans in a Monday phone interview. “So, while it’s not a fiscal issue as you would expect, it is a pure, cold, calculated, political decision that they’re making here not to ask for anything.”

Republicans haven’t joined Democrats in questioning the utility of a debt limit. They’ve acknowledged the current standoff hasn’t sparked a substantive conversation on the debt and deficit, but they blame Democrats for pushing a $3.5 trillion bill through reconciliation without Republican input.

“The law says we have a debt limit,” Sen. Roy Blunt (R-Mo.) told reporters Monday. “And my view is that the greatest benefit of having the debt limit discussion is that you have helpful and genuine discussions about spending.”

Sen. Shelley Moore Capito (R-W.Va.) similarly argued it’s beside the point to debate whether the federal government should have a debt limit.

“There’s a big discussion as to whether we should be going through this every two years,” Capito said in a hallway interview. “And I guess we’re one of, what, four countries that do it this way? I mean, the fact of the matter is, we do.”

To contact the reporter on this story: Jack Fitzpatrick in Washington at jfitzpatrick@bgov.com

To contact the editors responsible for this story: Zachary Sherwood at zsherwood@bgov.com; Heather Rothman at hrothman@bgov.com