Tuesday, October 05, 2021
The Appeal of the Trillion Dollar Coin
Lots of people, including me, find what is going on in Congress right now kind of baffling. In a nutshell, here is the state of play (and thanks to Ben Nesbit for explaining some of this to me):
-- The Senate has passed, by a vote of 69-30, a $1 trillion infrastructure bill that would invest in new roads and bridges, railways, climate change protections, high speed internet, and many other projects. BUT, this bill has yet to pass the House.
-- Meanwhile, the House has passed a $3.5 trillion bill which would broaden investments in health care, education, and other social spending.
-- A small group of Democratic moderates in the House want to pass the Senate infrastructure bill now. But progressives are insisting that they will not vote for the infrastructure bill until the Senate approves the much larger social spending bill.
-- Meanwhile in the Senate, two Democratic moderates, Manchin of WV and Sinema of AZ, have rejected the $3.5 million social spending bill in the absence of a major downsizing.
-- And thus, neither bill is moving, largely because of divisions within the Democratic Party.
-- Meanwhile, Congress has to do two separate things: fund the government in the short term, and raise the debt ceiling to allow that new spending. And, of course, there is a standoff on those issues, as well.
It could turn out that we get neither the social spending bill OR the social spending bill, which would be a huge failure for the Biden administration-- and one they very much want to avoid.
Which brings us to the trillion-dollar coin. In short, the administration could mint a new trillion-dollar coin that would then be transferred to the Treasury, Presto! Lots of money, with no need to increase the debt or raise the debt ceiling.
The idea first came up during and earlier crisis, in 2011, but actually was raised in an episode of the Simpsons 13 years before that.
Why not do it?
Well, it seems kind of silly, but that's not a reason. Nor is "someone might steal it," because it would be impossible to fence. The real problems are the risk of inflation that comes with a big jump in the money supply and the breach of the independence of the central bank.
Still... pretty intriguing, huh?
