Thank You, Henry Blodget! I was just about to start writing a post about how the Trillion Dollar Coin is less absurd than a sitting senator calling for the U.S. to default on its debt,and found out you already wrote it!
“If the Republicans in Congress are really irresponsible and outrageous enough to hold the reputation and economy of the United States of America hostage just to win a few re-election points, then perhaps the appropriate response is for the Treasury to save the country by minting a “trillion-dollar coin.”
If you’re like most people, you’ll jump to the wrong conclusion when you hear about this “trillion-dollar coin.”
You’ll think that the “trillion dollar coin” is just another way for the government to print money out of thin air to pay for spending we can’t afford.
But that’s actually not what the “trillion-dollar coin” idea is.
The “trillion-dollar coin” is just a legal gimmick that responsible people in the U.S. government might use to enable the country to pay bills and honor commitments…without relying on a group of selfish, irresponsible people in Congress to first raise the debt ceiling.
Basically, the “trillion-dollar coin” would just allow the Treasury, which pays the country’s bills, to keep writing checks regardless of what Congress does with the debt ceiling.
Yes, we have a budget problem. Spending (red) is too high as a percent of GDP and tax revenue (blue) is too low.
And then the hundreds of millions of other reasonable, responsible people in the country can just go on about their business until the folks in Congress finally grow up enough to address our budget problem like adults.”
This is a great post – it goes into incredible detail about how out-and-out stupid it is to threaten a default and use the debt ceiling as a negotiating tool. It’s beyond foolish.
I do disagree with one part of this post. We do have a budget problem, but Mr. Blodget has it backwards. Spending is too low, and tax revenue is too high. We need more deficit spending, we need more stimulus right now to get our economy moving. The Atlantic pointed out, Ben Bernanke is begging congress to spend more money AND lower taxes. The IMF pointed out, we get a 40%-50% boost to our spending right now from fiscal multipliers. So, if there is any budget problem right now, it comes from taxes being too high, and not too low.