The trillion platinum coin idea came roaring back into the headlines today when the Huffington Post splashed it across its homepage.
An obscure provision of the federal code seems to give the Treasury Secretary authority to mint platinum coins worth whatever the Secretary declares them to be. A $1 trillion coin could be deposited with the Federal Reserve, which would allow the government to continue spending money even if it were barred from issuing more debt.
But can the government really pay its bills with a trillion dollar coin? Is it legal for the Treasury to create $1 trillion dollars out of nowhere?
The idea isn't a new one—it first came up the last time we neared the debt ceiling, in the summer of 2011—but it is increasingly gaining mainstream credibility. Paul Krugman approvingly mentioned it earlier this week. Congressman Jerry Nadler, the Democrat from New York, endorsed the concept in an interview with Capital NY. Business Insider explains why minting the coin wouldn't be massively inflationary or destroy the value of the dollar. Bloomberg's Josh Barro discussed an interesting twist on the idea yesterday. The hastag #mintthecoin has become ubiquitous on Twitter.
The most fundamental question about the platinum coin solution to the debt ceiling is this: is it legal? Can the Treasury really do this?
The starting place for this analysis is the U.S. Constitution. Article I, Section 8 of the Constitution lists 27 express powers granted to Congress. The most important of these for our purposes is the power to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
This at least raises the question about whether or not it is constitutional for the Treasury Secretary to mint a coin in order to bypass a Congressional restriction on debt accumulation. In the first place, the power to coin money and regulate the value of the coins rests with Congress, not the executive branch.
But Article I, Section 8 famously includes the "necessary and proper" clause, which is often referred to as the "elastic clause" because it allows the government to stretch beyond its expressed powers.
The clause says Congress has the power "to make all Laws, which shall be necessary and proper for carrying into Execution the foregoing Powers, and all the Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof." This means—at the very least—that Congress can make laws required for carrying out its express powers.
So, for example, Congress is permitted to establish an Office of Weights and Measures within the Treasury Department, even though there's no constitutional provision authorizing such an office. This is considered an exercise of the implied powers of Congress under the necessary and proper clause.
There are limits to how far Congress can stretch its powers under the necessary and proper clause. Of particular interest to us here is the non-delegation doctrine, which holds that the Constitution's requirement that laws be passed by both houses of Congress and signed into law by the government constrains the ability of Congress to delegate its lawmaking authority to other bodies.
Non-delegation arose most notably as a challenge to administrative agency authority during the New Deal. In a pair of cases known to legal scholars as Schechter Poultry and Panama Refining, the Supreme Court ruled that Congress and President had gone too far in giving power and discretion to the executive branch.
It's not exactly clear how strongly this doctrine is still adhered to by modern courts. In the years since the New Deal, non-delegation has rarely been invoked to invalidate administrative action. But in 1999, the influential D.C. Circuit Court breathed new life into non-delegation when it ruled that the Environmental Protection Agency's interpretation of the Clean Air Act was an unconstitutional delegation of legislative power. In Whitman v. American Trucking, the appeals court declared that the scope of the EPA's rulemaking authority was too broad because Congress had failed to provide an "intelligible principle" to guide the agency.
The Supreme Court eventually reversed the D.C. Circuit, holding that the rulemaking authority under the Clean Air Act was "well-within" the boundaries of Congressional delegation. But it went out of its way to affirm the basic principle of non-delegation the D.C. Circuit had relied upon:
Article I, Section 1, of the Constitution vests "[a]ll legislative Powers herein granted... in a Congress of the United States." This text permits no delegation of those powers, and so we repeatedly have said that when Congress confers decision making authority upon agencies Congress must "lay down by legislative act an intelligible principle to which the person or body authorized to [act] is directed to conform."
So the question that is relevant for us here is whether or not the law that authorizes the creation of platinum coins by the U.S. Treasury lays down an "intelligible principle" to which the Treasury is directed to conform.
Here's what the law says:
"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."
You see the problem here, right? There's no intelligible principle whatsoever. The law gives the Secretary complete discretion over everything having to do with the minting of platinum coins. This is very likely an unconstitutional delegation of the legislative power to coin money and regulate the value thereof.
Of course, the Court could sidestep this issue by simply declaring that the law doesn't really do what it seems. As Kevin Drum argues, the law could be interpreted as creating only the power to create commemorative coins issued for collectors and platinum investors. I don't think this is a very good way of reading a straight-forward statute but it wouldn't be the first time that federal courts interpreted laws in creative ways to avoid finding them unconstitutional.
One question about this, however, is who might have standing to sue the government over the issuance of a $1 trillion platinum coin. The federal courts hold that a plaintiff must be able to show that he has suffered or will imminently suffer injury in order to have standing to sue. For these purposes, it's not good enough to be, say, a serious advocate of the non-delegation doctrine. Your injury cannot be purely ideological.
I suppose that workers at the U.S. Mint may have standing to sue in order to avoid being forced to commit an unconstitutional act. But in that case someone else could be assigned the duty of minting the coin, mooting the case. Unless every single person at the U.S. Mint refused to mint the coin, this wouldn't be a path to standing before the federal courts.
More likely, members of Congress would have standing to sue. The exact contours of Congressional standing are not clear. Some case law has been worked out by the D.C. Circuit but the Supreme Court hasn't spoken on the merits of many of the issues. In Kennedy v. Sampson, the appeals court held that standing could be created when an executive exaction resulted in the nullification of a specific congressional vote or opportunity to vote. This seems to be exactly what is being contemplated by the use of the platinum coin to circumvent the debt ceiling. Congressmen would likely have standing to sue in this case.
Nothing is certain about this, of course. The federal courts may deny Congressional standing just so that the courts can stay out of the fight between Congress and the White House over the debt ceiling. This isn't the sort of thing in which the federal judiciary likes to get involved.
The platinum coin solution seems to me to be at least arguably authorized by statute. But that statute seems to represent an unconstitutional delegation of legislative authority. Given this very plausible ground for finding the $1 trillion platinum coin maneuver unconstitutional, it would be extremely unwise for the Treasury Department to pin its hopes on avoiding a fight over the debt ceiling on its platinum mint.
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