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Saturday, January 12, 2013

No Trillion Dollar Platinum Coin

by Calculated Risk on 1/12/2013 09:59:00 PM

From Joe Weisenthal at Business Insider: White House Rules Out The Trillion Dollar Coin Option To Break The 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,” [Anthony Coley, a spokesman for the Treasury Department]
From HuffPo:
"There are only two options to deal with the debt limit: Congress can pay its bills or they can fail to act and put the nation into default," said Press Secretary Jay Carney. "When Congressional Republicans played politics with this issue last time putting us at the edge of default, it was a blow to our economic recovery, causing our nation to be downgraded. The President and the American people won't tolerate Congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy. Congress needs to do its job."
emphasis added
I don't think of this as "hostage taking" since I remain confident that Congress will raise the debt ceiling (really just about paying the bills) and pay the bills on time - without any concessions from the White House. A better term would be "economic terrorism" since they are just trying to scare people.

It would be better for America, the economy and all parties to raise the debt ceiling sooner rather than later.

The good news is, as Goldman Sachs chief economist Jan Hatzius wrote yesterday:
"By 2015, we expect the federal deficit to be down to $500bn, or just under 3% of GDP. If this forecast is correct, concerns about the federal deficit are likely to diminish over the next few years."
That fits with my view for the next few years.

We should all agree:  Pay the bills.  Stop scaring people.  Raise the debt ceiling today.