Over the weekend, the White House shot down the idea of having the Treasury print a $1 trillion platinum coin as a way of avoiding national default if Republicans, as they are threatening, refuse to raise the $16.4 trillion debt ceiling. “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” Treasury spokesman Anthony Coley told Bloomberg News in an e-mailed statement on Saturday.
This was a heartbreaking turn of events to the bloggers and columnists who’d pushed the once-obscure idea to the forefront of the national debate. But it wasn’t a particularly surprising one.
Why would the White House willingly close off an option to avoid default? Because the whole thrust of its strategy on the debt ceiling is to stare down Republicans and (administration officials hope and pray) force them to flinch rather than bring on economic calamity. Having options like the platinum coin and the 14th Amendment floating around as a possible escape hatch made Republicans more likely to force default, because it let them believe they could refuse to raise the ceiling and not wind up responsible for the consequences.
And sure enough, that was message that came from the White House after the Treasury news. “There are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default,” read a statement the administration issued on Saturday.
For better or worse (I’ve argued for worse), the White House decided to set up this game of chicken over the debt ceiling rather than the fiscal cliff, which would have been much safer. Killing the coin and the 14th Amendment option, which it did previously, preserves the clarity of this showdown and ensures that Republican capitulation or default are the only choices for resolution.