Tuesday, January 8, 2013
U.S. Rep. Greg Walden, R-Ore, plans to fight any Congressional move to avoid spending cuts by minting trillion-dollar platinum coins to pay the federal government’s bills.
Walden said that proposal was brought forward last week by U.S. Rep. Jerrold Nadler, D-N.Y., who is the ranking member of the Judiciary Committee’s Subcommittee on the Constitution.
Here are comments on the issue by Walden at Monday’s town hall meeting in The Dalles, reported by RaeLynn Ricarte of The Dalles Chronicle:
Walden said the idea is being given semi-serious consideration among some Democrats in the House and championed by Princeton professor Paul Krugman and several major media outlets as a way to avoid unpopular spending cuts that would slash the $16.4 trillion national debt.
“We need to reduce spending but this is the kind of stuff we face,” said Walden during Monday’s town hall meeting at Columbia Gorge Community College in The Dalles. “Can you imagine if all you had to do to solve your problem was say, ‘Print some coins and we’re done’?”
Walden said when he and his wife, Mylene, owned and operated five small radio stations for 26 years, they couldn’t create more money “out of thin air” to keep the businesses running.
“We had to sit down and figure out how to balance the books — that’s what Washington needs to do as well,” he said. “We must reduce spending and get our financial house in order.”
He intends to drop a bill that will stop the “absurd and dangerous” production of high-value platinum coins to cover government expenditures. The idea being floated by Nadler is to have specially issued coins be deposited into the Federal Reserve in time to cover the bills so the government does not hit the debt ceiling in late February or early March.
GOP leaders contend the use of the coin could lead to hyper-inflation by furthering devaluing the American dollar.
The U.S. Mint has strict regulations about how paper, gold, silver and copper money get printed. But Nadler said no there are no restrictions on minting a platinum coin of any denomination and that is one way that Democrats can avoid a political battle with GOP leaders who are intent on making deep spending cuts to entitlement programs.
(The debt ceiling is the legal limit that the federal government can borrow to meet its obligation. If Congress does not increase the limit, or take other steps to avert the crisis, the U.S. will be forced to default on its debt obligations. If that happens, the U.S. Department of the Treasury has predicted that a major economic crisis would be triggered worldwide.)
Walden told the 100 people attending his first town hall of 2013 that the U.S. is borrowing $100 billion per month to cover its bills. He said House Speaker John Boehner reported in a Wall Street Journal article published Jan. 6 that he was “stunned” when told by President Barack Obama that, “We don’t have a spending problem.”
That discussion reportedly took place behind closed doors during last-minute efforts to avoid the Jan. 1 expiration of tax cuts enacted by President George W. Bush that would have raised rates for nearly all Americans.
In other media reports, Obama has said that he will only support spending cuts that are tied to tax reforms that again ask the wealthy to pay more. Under the deal to avoid what is commonly known as the “fiscal cliff,” those making a million and up will pay an average of about $122,560 more in federal taxes and see a 5.7 percent drop in after-tax income, according to the Tax Policy Center.
House Minority Leader Nancy Pelosi contends that Obama has the authority under 14th Amendment of the Constitution to unilaterally raise the debt ceiling and does not need permission from Congress. That amendment says the debt of the U.S. will always be paid and she believes that language gives the president the authority to act alone if necessary.
Walden said GOP leaders do not believe Obama can legally act as urged by Pelosi and other Democrats because Congress is authorized by the Constitution to set the budget.