Ryan J. Reilly has an interesting article up at Huffington Post.
WASHINGTON — The Obama administration was serious enough about manufacturing a high-value platinum coin to avert a congressional fight over the debt ceiling that it had its top lawyers draw up a memo laying out the legal case for such a move, The Huffington Post learned last week.
The Justice Department’s Office of Legal Counsel, which functions as a sort of law firm for the president and provides him and executive branch agencies with authoritative legal advice, formally weighed in on the platinum coin option sometime since Obama took office, according to OLC’s recent response to HuffPost’s Freedom of Information Act (FOIA) request. While the letter acknowledged the existence of memos on the platinum coin option, OLC officials determined they were “not appropriate for discretionary release.”
I am very confident the OLC said minting the trillion dollar coin is permissible. After all, this is the same crew that OKed CIA drone strikes on US citizens. Are they really going to draw the line here and say the US Mint coining lawful money is going too far? As a practical matter though, it doesn’t really matter what the OLC said. The President can overrule the OLC’s legal opinion and act accordingly. In 2011 the OLC wrote that the President had to go to Congress to get permission to use force in Libya and he overruled them (at which point, the Attorney General should have resigned, just as AG Ashcroft and Dep AG Comey threatened to resign when Bush nearly overruled an OLC opinion), but I digress. The law unambiguously gives the Secretary of the Treasury all the power he needs to mint the trillion dollar coin, its hard to write a legal opinion around that fact. What’s more I doubt the Fed would say no to the TDC until after (hoping to dodge the decision) DOJ had already told Tsy it was OK.
The end of Reilly’s piece is kind of downer…
At a press conference in October, Obama said that the legal controversy surrounding either option would make investors nervous, since the issue would likely be tied up in litigation for a long time.
“So a lot of the strategies that people have talked about, well the president can roll out a big coin, or he can resort to some other constitutional measure,” Obama said. “What people ignore is that ultimately what matters is, ‘What are the people who are buying treasury bills think?'”
Wrong and wrong. No one has standing in court to challenge the Secretary on this, not even the Federal Reserve (as I’ve written here before, ties go the Secretary). What’s more, since the alternative is debt default, why are we worried about what people buying Treasury bills think? The Fed can peg any quantity of T-bills at any price it wishes by guaranteeing primary dealers it stands ready to buy them back in the secondary market. This is how during World War II the Fed could peg the T-bill rate at 0.375% despite Tsy running deficits 20% to 30% of GDP year after year. Certainly the govt has a duty to pay its debt but it has no duty or need to entice anyone to buy its debt. That the President of the United States does not know that is a form of learned helplessness and is kind of depressing to watch.
I can’t wait to read the OLC memo once its released, I’m curious to see how they frame the issues. I certainly wasn’t contacted by the govt about this, if Philip Diehl (a former Mint Director and TsySec Chief of Staff) had any conversations with govt officials he’s comfortable sharing, the talking stick is his…