There is a lot of loose talk out there about the legal status of the Trillion Dollar Coin idea. Let’s go to the statute books.
31 USC § 5111
(a) The Secretary of the Treasury—
(1) shall mint and issue coins described in section 5112 of this title in amounts the Secretary decides are necessary to meet the needs of the United States;
(2) may prepare national medal dies and strike national and other medals if it does not interfere with regular minting operations but may not prepare private medal dies;
(3) may prepare and distribute numismatic items;
31 USC § 5112
(a) The Secretary of the Treasury may mint and issue only the following coins:
(1) a dollar coin that is 1.043 inches in diameter.
(2) a half dollar coin that is 1.205 inches in diameter and weighs 11.34 grams.
(3) a quarter dollar coin that is 0.955 inch in diameter and weighs 5.67 grams.
(4) a dime coin that is 0.705 inch in diameter and weighs 2.268 grams.
(5) a 5-cent coin that is 0.835 inch in diameter and weighs 5 grams.
(6) except as provided under subsection (c) of this section, a one-cent coin that is 0.75 inch in diameter and weighs 3.11 grams.
(7) A fifty dollar gold coin that is 32.7 millimeters in diameter, weighs 33.931 grams, and contains one troy ounce of fine gold.
(8) A twenty-five dollar gold coin that is 27.0 millimeters in diameter, weighs 16.966 grams, and contains one-half troy ounce of fine gold.
(9) A ten dollar gold coin that is 22.0 millimeters in diameter, weighs 8.483 grams, and contains one-fourth troy ounce of fine gold.
(10) A five dollar gold coin that is 16.5 millimeters in diameter, weighs 3.393 grams, and contains one-tenth troy ounce of fine gold.
(11) A $50 gold coin that is of an appropriate size and thickness, as determined by the Secretary, weighs 1 ounce, and contains 99.99 percent pure gold.
(12) A $25 coin of an appropriate size and thickness, as determined by the Secretary, that weighs 1 troy ounce and contains .9995 fine palladium.
(k) The Secretary may mint and issue platinum bullion coins 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.
31 USCS § 5103
United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.
Legislative History, Such As It Is, and Plain Language
Section (k) Was Added In By P.L. 104 – 208, the 1997 Omnibus Consolidated Appropriations Act. The provision isn’t discussed in the House Report or the Senate Report as best I can tell. The statute adds several provisions besides section (k) related to commemorative coins, which generally are regarded as numismatic or collectible coins as opposed to circulating coins. The point of those sections is to enable the Treasury to make a significant seigniorage profit on these coins, and to raise money to assist in worthy causes. There are numerical limits on certain of the coins, as in section (m), presumably to protect their numismatic value, although the Secretary of the Treasury is authorized to make more if there is sufficient demand. There is no similar limitation on issuance of platinum coins. In any case, all coins are legal tender, whether they are numismatic or intended for circulation.
In a similar way, the Treasury is authorized to print U.S. currency notes itself, but the amount is limited to $300 million. 31 USCS § 5115.
Section 5111 authorizes the Secretary of the Treasury to mint and issue coins as described in § 5112 in such amounts as the Secretary decides are necessary to meet the needs of the United States. This is very broad language, and does not appear to establish any limitation on the factors that might help the Secretary determine the needs of the United States.
Of course, our conservative Supreme Court Justices aren’t interested in legislative history (except when it suits them). They rely on the plain language of the law. It would be a real hoot to watch Justice Scalia explain why the plain language is not plain enough for him.
The Debt Ceiling
The debt ceiling statute, 31 USC § 3101 sets a maximum amount of money that the Treasury can borrow. Currently, the amount is $14.294 trillion. That section is modified by 31 USC § 3101A, which allows the President to increase the borrowings by an additional $2.1 trillion subject to approval after the fact by Congress. Between the two sections, the limit is currently $16.394 trillion. The Treasury has determined that the limit has been reached, and is currently operating in an emergency fashion to avoid issuing more debt.
There are several applicable provisions of the Constitution and statutory law that are implicated by this problem. Two law professors, Neil Buchanan of The George Washington University Law School and Michael Dorf of Cornell University Law School have written articles discussing the problem. How to Choose the Least Unconstitutional Option: Lessons for the President (and Others) from the Debt Ceiling Standoff, 112 Colum. L. Rev. 1175 (2012), and Nullifying The Debt Ceiling Threat Once And For All: Why The President Should Embrace The Least Unconstitutional Option, 112 Colum.L. Rev. Sidebar 237 (2012). Nullifying is available here. The authors describe the problem as a
… trilemma”: faced with the constitutional duty to execute the spending laws that Congress enacted, to collect tax revenues under the laws that Congress enacted, and to borrow no more than the amount of gross debt specified in the debt ceiling statute, the president would have to violate at least one of those laws when the debt ceiling is reached. In thus violating his oath to faithfully execute the laws–all of the laws–of the United States, he would be acting unconstitutionally. The only question was which unconstitutional choice would be least unconstitutional.
Id. at 239, fn omitted. In How to Choose, the authors conclude that the least serious violation of the Constitutional duty to enforce the laws would be to continue to issue debt. Their explanation is that Congress can fix the problem whenever it chooses, either by increasing the debt ceiling, or by increasing tax revenues or by cutting spending, or some combination. They point out that the problem was created by Congress, which enacted a continuing resolution on taxing and spending that practically insured that the debt ceiling would be reached sometime in 2013.
The authors note that the President has rejected the 14th Amendment solution, so they assume that the President has decided that he is required to spend less than that which Congress has required him to spend. That would, of course, violate the Impoundment Control Act of 1974, which requires the President to spend the money authorized by Congress in accordance with its instructions. Furthermore, there are two Supreme Court cases holding that the President has the Constitutional duty to comply with the spending directions of Congress. Train v. City of New York, 420 US 35 (1975) and Clinton v. City of New York, 524 US 417 (1998). The authors explain that these decisions are rooted in separation of powers, the fundamental principle of our government that each branch of government has specific powers denied to the others. The Congress has the power of the purse. The President can veto an appropriations bill, or a tax bill, but he cannot refuse to spend some of the money authorized by a spending bill, because that would give him an unbalanced veto in direct contravention of the Constitution.
Bmaz at Emptywheel makes a potent argument about the separation of powers inherent in the Trillion Dollar Coin. He doesn’t, however, deal with the separation of powers argument inherent in refusing to comply with spending directions of Congress. Bmaz might respond that the President is not refusing to spend the money, he is merely not doing it until he feels he has no choice. Still, assuming that Congress doesn’t act quickly on the matter, the problem becomes intractable almost immediately. Almost all payments are done by computer, not by check. How can short term stoppage of payments be managed without changing computer systems across the government? How is that to be paid for? Can Congress create a separation of powers problem for another branch of government and then use that problem to punish that branch? Can Congress abuse the separation of powers to the detriment of the entire nation?
The Trillion Dollar Coin as a Solution
The law professors dismiss the Trillion Dollar Coin as “cartoonish and desperate”, and state that it would “likely spook the markets, leading lenders to demand a very high interest rate”. How to Choose, at 1231. Those interest rate fears are common among a certain group of people, but so far they haven’t been realized. In any event, the same argument can be made for Treasury Obligations created in excess of the statutory debt ceiling, which is their solution.
Everyone agrees that this is a bad situation. What is the least bad alternative? Bmaz says the least bad alternative is the chaos of a government shutdown. Suppose the Secretary of the Treasury disagreed. Suppose he thought that the damage to the economy would be overwhelming. Would that justify him in issuing millions of quarters or $50 gold pieces and sending them to the Fed for deposit in the Treasury account? Again, the only statutory factor governing the determination of the Secretary is the “needs of the United States”. Would the law professors regard the minting of $50 gold pieces as cartoonish and desperate? Would bmaz suggest that it violated the separation of powers? If not, then why not the Trillion Dollar Coin?
Photo in the public domain.