Sen. Mike Lee (R-UT) will introduce legislation this week to prevent the Treasury from minting a $1 trillion platinum coin, a controversial workaround to raising the debt limit.
Lee, who pitched a similar bill in 2021, is set to introduce the legislation on Thursday, the Washington Examiner has confirmed. There are no co-sponsors so far, and the bill will be referred to the Senate Banking Committee for consideration.
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The news comes as Congress stares down a fast-approaching deadline to act on the debt limit to prevent the United States from defaulting on its obligations.
The U.S. hit its debt ceiling last month, and the Treasury Department began “extraordinary measures” to prevent default. The measures essentially amount to shifting money around government accounts to pay incoming bills without issuing new debt. But those measures are set to dry up sometime this summer, meaning there needs to be a fix in the coming months.
One idea to side-step the politics of the debt limit fight is through the use of a platinum coin.
A provision in a law intended for developing commemorative coins allows the Treasury to mint a platinum coin in any denomination. Theoretically, the Treasury could mint such a platinum coin with a $1 trillion face value and deposit it in the Treasury’s account at the Federal Reserve. The Treasury could then draw on the funds without issuing new debt.
In addition to being made out of platinum, the coin in question would also have to bear the words “United States of America,” “Liberty,” the year issued, “In God We Trust,” the denomination, and “E Pluribus Unum.”
The idea of a $1 trillion coin has been kicking around for more than a decade and gained prominence amid the struggle over the debt limit in 2011, perhaps the most acrimonious debt limit fight to date. The out-of-the-box idea gained prominent endorsements, including economist Paul Krugman and Rep. Jerry Nadler (D-NY). During the 2021 debt ceiling debate, Rep. Rashida Tlaib (D-MI) tweeted out #MintTheCoin.
Lee and other detractors of the platinum coin theory have disparaged it as a “legal loophole.” But despite the seemingly basic legislative process to block the Treasury from using the accounting trick, Congress has never clarified the law to prevent such a coin from being minted.
Lee’s previous legislation related to a platinum coin, the Cancel the Coin Act, would have simply amended the law to prohibit the Treasury from minting or issuing any coin — including platinum coins — with a nominal or face value exceeding $200.
Republicans hope to use the debt ceiling as leverage to extract concessions from the Biden administration and congressional Democrats over spending. In debt limit fights in the past, Congress has always acted to raise the limit and avoid default.
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According to House Speaker Kevin McCarthy, cuts to Medicare and Social Security are off the table in these negotiations. The position, popular among most but not all Republicans, was made clear during the State of the Union when GOP members reacted loudly to President Joe Biden’s suggestion that some in the party want to trim the popular entitlement programs.
It’s unclear when the Treasury’s extraordinary measures will run their course. However, the Congressional Budget Office is projecting the so-called “X Date” when the U.S. would default to be sometime between July and September.