Trillion Dollar Coins Being Considered in Debt Ceiling Talks: Clearly Democrats Have Lost Their Mind
As I predicted last week when Congressional Republicans caved on unconditionally passing tax hikes in a last minute deal to avoid the fiscal cliff, many of them wishfully hoped that surely the conversation on Capitol Hill will finally now focus on spending reform.
“We all know we gotta quit spending so much.”
Well, not all of us.
When giving speeches on camera, President Barack Obama will say things like, “If we’re serious about reducing the deficit, we have to combine spending cuts with revenue,” which will get a round of applause from the media attendees. Yet no one bothers to follow up on what he and his administration are actually demanding behind closed doors. In reality, their idea of “balance” to deficit reduction is higher taxes and higher spending.
In the fiscal cliff deal that was reached, lawmakers “balanced” $620 billion in new taxes with merely $15 billion in spending cuts – or only $1 in spending cuts for every $41 in tax hikes.
That’s about as balanced as New Jersey Governor Chris Christie’s diet.
Even when Presidents Ronald Reagan and George H.W. Bush increased taxes in return for spending cuts – cuts that never ultimately came – they did so at promised ratios of $3 in spending cuts for every $1 in tax hikes and $2 in spending cuts for every $1 in tax hikes, respectively.
If this deal is considered “compromise,” then bank robbers must make great negotiators.
Republicans also have another thing coming if they think Democrats are serious at all about having a conversation on spending reform. In an interview with the Wall Street Journal, House Speaker John Boehner (R-Ohio) revealed that President Obama believes, “'We don’t have a spending problem … I’m getting tired of hearing you say that.”
Really, Mr. President? Let’s take a look at the math, shall we?
The federal government spends an average $10.4 billion a day, $433.3 million an hour, and $7.2 million per minute. That adds up to about $3.8 trillion a year. Last year we brought in a record $2.5 trillion in taxes (an all-time high, mind you) which still leaves a deficit of $1.3 trillion from our out of control spending levels – or about 4 months and 1 week’s worth of spending.
Let me repeat that – even with income tax rates at a near historic low last year, revenues have never been higher. So are our record high deficits and debt really a problem of revenues or a problem of spending?
So with tax rates on the rich restored to Clinton-era levels post-fiscal cliff, how much extra revenue is that expected to bring in every year? About $62 billion – or a week’s worth of federal spending (heck, we’ve already spent that since the bill was signed). That still leaves about four months’ worth of deficit spending every year, but according to the president, we don’t have a spending problem. Talk about denial.
Democrats are also in denial about what led to the budget surplus in the late 1990s. All they remember is that Bill Clinton raised tax rates on all Americans – hiking the top bracket from 28% to 39.6%. What they forgot is that Clinton and the Republican-majority Congress were able to slash spending from 23% of GDP down to 18%, on par with the historical rate of revenues as a percentage of GDP. That marked the first significant reduction of spending in decades and, coincidentally, helped balance the budget for the first time in 30 years – following up on a promise to deliver a government “that lives within its means.”
This president has clearly expressed his intent to focus solely on the tax side of the equation and ignore the spending side. His sentiments are being echoed by senior Democrats all over Washington from House Minority Leader Nancy Pelosi (D-Calif.) to House Budget Committee Ranking Member Chris Van Hollen (D-Md.). Indeed, they’ve made public their intention to continue to find ways to raise another $1 trillion in new taxes.
I should mention that some Democrats on the talk show circuit are feebly trying to claim we’ve “already cut” $1.2 trillion in spending (or $1.5 trillion, whatever figure they’re throwing out there), but those who know better are dismissing these budget gimmicks. They’re counting money that we weren’t even going to spend anyway in Iraq and Afghanistan this year as spending “cuts.”
That’s like someone telling me I need to cut back on the credit card charges and I respond, “Well, I was going to spend $275,000 on that Ferrari but decided not to, so that’s one spending cut….”
Not to mention the fiscal cliff deal adds another $3.9 trillion in debt, even with any additional revenue, according to the non-partisan CBO.
But with the vote to raise the debt ceiling yet again now looming, yet a new asinine idea is now gaining traction among progressive circles. As ABC News describes it, “It goes like this: Should Congress fail to extend the U.S. debt limit — reached again on Dec. 31 — the president could ask the Treasury to begin printing trillion dollar coins (in a process explained mostly seriously by Jim Pethokoukis on his American Enterprise Institute blog), a number of which could then be put toward fulfilling debt obligations in the event new legislation stalls in Congress.
"While there are laws in place to regulate how much paper, gold, silver or copper currency can be circulated by the government, there is nothing so clearly stated when it comes to platinum. That door open, the Treasury could have the U.S. Mint melt and mold a few trillion dollars of it, then ship the goods over to the Federal Reserve for safekeeping until the time comes to pay the bills.”
We’re doing everything we possibly, legally can to hold Washington accountable for it’s out-of-control spending and desperately trying to balance our books, yet leave it up to the progressives to look for another loophole to exploit in the system so Washington can keep drowning us in red ink. Unbelievable.
Rep. Greg Walden (R-Ore.) is already working on passing a bill to kill this idea in its infancy, but that isn’t stopping Keynesian imagination from running wild.
Uber progressive hero Matthew Yglesias fantasizes on his blog, “It’s a perfectly reasonable idea, and the Obama administration should be happy to agree to do it. If, that is, Congress agrees to close the loophole that lets it pass tax and spending bills that make a budget deficit necessary and then refuse to allow the borrowing to finance that deficit. In other words, kill the loophole in exchange for eliminating the statutory debt ceiling. In the future, the government will spend what Congress tells it to spend and collect the taxes Congress tells it to collect and rely on borrowing rather than platinum to fill the gap. That’s how it ought to work, and it’s how it has worked in practice for decades. Turning the gap into a forum for high-stakes legislative brinksmanship was a terrible idea. But now that it’s happened, we can’t just exhort congressional Republicans to start being nicer. We need concrete action, and silly-sounding though it may be, the platinum coin fits the bill.”
Good Lord, now we’re talking of eliminating the authority the Constitution gives Congress on borrowing? Did it ever dawn on the left that the founding fathers put that in there for a reason? I doubt there would be any talk of removing these checks and balances if the positions were reversed. Amazingly, during the 2000s, Democratic leaders from Obama to Senate Majority Leader Harry Reid (D-Nev.) strongly spoke out against raising the debt ceiling over and over again to fund Washington’s reckless spending…until it became their reckless spending.
Yglesias goes on to claim that, “Geithner can have the Mint create a $1 trillion coin. Then he can walk it over to the Federal Reserve and deposit it in the Treasury’s account. Then the government can keep sending out the checks—to soldiers and military contractors, to Social Security recipients and doctors who treat Medicare patients, to poor families getting SNAP and to FBI agents — it’s required by law to send — and the checks will clear.”
Newsflash: none of those services stop if a partial government shutdown occurs as a result of Congress failing to authorize more borrowing. So what does get shutdown? Parks and recreation.
Does anyone else not see how sick it is that progressives will resort to these lengths – searching for constitutional loopholes or simply ignoring it altogether – rather than agree to any meaningful spending reforms other than defense cuts? They won’t even address entitlements which eat up more than half our tax dollars and could only manage to cut less than $40 billion (or less than 4 days’ worth of spending) last year. This despite our trillion dollar deficits leading our debt to eclipse our entire GDP and a credit rating downgrade.
As for the lame brain $1 trillion platinum coin idea, fittingly, John Maynard Keynes has emerged as an early favorite face to don the piece.