Thursday, January 10, 2013

Big Coins, Political Credibility, and Hatred of Lawyers

-- Posted by Neil H. Buchanan

There is, I am amazed to observe, a movement afoot among many liberals to counter the Republicans' debt ceiling threats with the so-called "platinum coin option."   It is understandable that liberals would be anxious to explore a variety of ways to end this hostage crisis, and this one has a certain satisfying (if a bit adolescent) appeal: "You think you can negate one law with a different law that makes no sense?  Well, we found a loophole that makes even less sense, but it works for our side!"  As it turns out, however, the loophole is not only insane (as its backers happily admit), but it is not necessarily even the legal escape hatch that they claim it to be.

What is the gambit?  As the former director of the U.S. Mint (who, amazingly, backs this option) explains, there is a law that allows the Treasury (without further Congressional consent) to mint platinum coins.  That law, unlike the laws that authorize the minting of other types of coins, lacks a provision limiting the denomination of the platinum coins.  Therefore, the coins can be big, in the sense that they can be designated to have any value that the Treasury says.

The Treasury could mint, say, two coins that Treasury says are worth $1 trillion each.  It would then deposit the coins with the Federal Reserve, which is where Treasury usually deposits the money that it receives by selling Treasury securities, with the coins serving as collateral to allow the government to pay for authorized spending under the existing budget (or, in this case, the continuing resolution).

It sounds sketchy, but "[t]he accounting treatment of the coin is identical to the treatment of all other coins. The Mint strikes the coin, ships it to the Fed, books $1 trillion, and transfers $1 trillion to the Treasury’s general fund where it is available to finance government operations just like with proceeds of bond sales or additional tax revenues."

Sound too good to be true?  Not to Harvard law professor Laurence Tribe, who says that this is not even a matter of exploiting a loophole, but rather that "it entails just reading the plain language that Congress used. The statute clearly does authorize the issuance of trillion-dollar coins."  Why does it not matter that Congress absolutely did not have this in mind, given that everyone agrees that the statute in question was passed to allow Treasury to issue commemorative coins in nominal amounts?  "[T]here’s no textual or other legal basis for importing this probable intention into the statute. What 535 people might have had in their collective 'mind' just can’t control the meaning of a law this clear."

Most importantly, Tribe says, "It’s also quite clear that the minting of such a coin couldn’t be challenged; I don’t see who would have standing."  In short, it is a perfect ploy for the Democrats to use.  Textually supported (in that it is not mentioned in the text at all), and immune to judicial intervention.

This analysis is, at best, incomplete.  Consider the question of intent, that Tribe and others have argued is irrelevant.  The very day that Tribe's comments were being published, the Supreme Court was hearing oral argument on a case that centered on the question of whether a gap in a statute could be filled in opportunistically.  A news article in The New York Times explained that a recent class-action law requires cases seeking more than $5 million in damages to be heard in federal courts.  This, however, left open the possibility of defeating Congress's purpose by allowing cases of, say, $25 million to be divided into six sub-cases, allowing all of the cases to be heard in state court.

We do not know how the Court will rule on this case, but it should tell us something that the case made it all the way to the Supreme Court, and that the oral argument generated genuine (non-ideological) head-scratching.  If reading Congress's "collective 'mind' " cannot control the reading of clear statutes, why is this case even on the Court's docket?

The fact is that we read purpose into statutes and the Constitution all the time.  Indeed, Tribe and others have flatly rejected the argument against the debt ceiling under Section 4 of the 14th Amendment, saying that the purpose of that amendment was not to prevent actions that undermine confidence in the repayment of government debt. As Professor Michael McConnell (who agrees with Tribe about the 14th Amendment argument) recently put it: "Section 4 of the 14th Amendment is not about default, it's about repudiation of the debt. It was passed in the wake of the Civil War with the single purpose of ensuring that when Southern representatives were readmitted to Congress that they could not repudiate the war debt." (emphasis added)

One can argue that the language of Section 4 is less clear than the clear gap in the commemorative coin statute, but it seems more than a bit inconsistent to assert that there is simply no meaningful inquiry into the purpose of the statute, whenever the statute is silent as to a possible application of the law.  I am not saying that every jurist would conclude that the platinum coin option is illegal under this analysis, but there is every reason to believe that it is not an easy call.

That, however, is not the only problem with the claim that the platinum coin option is the "clearly legal" way around the debt ceiling.  The debt ceiling statute, 31 USC 3101(b), states that "[t]he face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the United States Government ... may not be more than" $16.394 trillion.  That is, the limit applies to the sum of two things: "obligations issued under this chapter" and "obligations whose principal and interest are guaranteed by the United States Government."  The first category applies to the usual Treasury securities: bills, bonds, and so on.  If Congress wanted the law to limit only the total amount of formal Treasuries, it could have stopped there.  Instead, it added that second category.

What is in the second category?  The law is not clear, because there is no statutory definition of "obligations" relevant to this section.  One of my research assistants was able to find a few definitions of "obligations" in other contexts. For example, 31 USC 3125 ("Relief for lost, stolen, destroyed, mutilated, or defaced obligations") defines "obligation" in a narrow way, but only for purposes of "this section."  Other provisions that define "obligation" generally do so to limit what would otherwise be a broad meaning of the term.

Therefore, if Congress goes out of its way to note when "obligation" should be given a narrower meaning, an applicable canon of construction tells us that "obligation" should otherwise be given its broader meaning.  And that is a problem for the platinum coin.  To go back to the former director of the Mint's explanation: "This works just like additional tax revenue or borrowing under a higher debt limit. In fact, when the debt limit is raised, Treasury would sell more bonds, the $1 trillion dollars would be taken off the books, and the coin would be melted."

In other words, the platinum coins look an awful lot like an "obligation."  They would work "just like additional ... borrowing," and they would be sent sent to the Fed on the understanding that the Treasury would replace them when the debt ceiling was increased.  When it sent the coins to the Fed, therefore, the Treasury would be obligating the United States government to take the coins back and melt them down when they no longer served the purpose of evading the debt ceiling (all the while guaranteeing their principal value, with zero interest).

To put it in broader terms, we are looking at yet another substance-versus-form problem.  Those who advocate the Big Coin gambit are doing so precisely because "[t]his works just like additional tax revenue or borrowing under a higher debt limit."  This, therefore, is not a matter of divining intent, but rather an inquiry into whether re-labeling something as "not an obligation" makes it not an obligation.  A riddle attributed to President Lincoln is apt: "How many legs does a horse have, if you call a tail a leg?  Four, because calling a tail a leg doesn't make it a leg."

Professor Dorf and I have been saying that there are no constitutional options under our "trilemma."  We acknowledged in footnotes the existence of the Big Coin option, dismissed it as absurd, and suggested that platinum coins -- even if legal -- would be worse than following an unconstitutional course.  If either of my arguments in this post is correct (or even colorable), however, then we cannot be sure that the coins (or, under my second argument, the "exploding options" or other possible workarounds that have been floated) are even legal in the first place.

Of course, as we all admit, none of this would ever get to court.  Tribe mentions the standing problem, and the "political question doctrine" strikes me as even more of a hurdle.  If that is the case, however, then we have to ask what we are trying to accomplish here. If the ultimate arbiter of this is going to be public opinion, then it matters not to be snarky and cute.  And whatever else one might say about the platinum coins option, it comes across as extremely snarky and too-cute.  As one of my research assistants put it: "This is the kind of argument that makes people hate lawyers."  Grabbing onto some loophole and spinning a too-good-to-be-true argument out of it is not going to convince anyone.  And it can do real damage.

[Tomorrow, I will analyze Paul Krugman's recent enthusiasm for the Big Coins gambit, which is based not on legal arguments but on economic and political arguments.  There, I will explain why I think the Big Coin gambit is a seriously bad idea on the merits.]


AF said...

It may be the government's intention to buy back the coin, but it wouldn't be an obligation.

And as for purposism, it's not quite as open-ended as you suggest because the statutory language is unambiguous. You'd need to resort to the absurd-results canon. Which (in the counterfactual world where this would be litigated) could be countered with the constitutional avoidance canon, citing Buchanan & Dorf!

AF said...

Hopefully, in tomorrow's post you will address whether you believe the platinum coin option is worse than defaulting on bond payments and/or immediately cutting government spending by 40%.

If not, it may not be helpful to take it off the table, particularly given that your preferred alternative, for better or worse (worse I'm sure!), does not appear to be on it.

Paul Scott said...

What I am really interested in tomorrow is how you could consider the coin more problematic, practically, not legally, than issuing unsecured bonds. The cost of unsecured bonds is measurable, or at least at this point, estimable. Other than people thinking it is funny, I am not seeing any downside to minting coins that is any different than Congress deciding to print new money. Inflation is a tool every sovereign uses to control debt. I am not seeing the mechanism by which the US expands its currency as that big of a deal and am looking forward to reading why you think it is.

Michael C. Dorf said...

The answer to AF--and to Professor Tribe for that matter--is that while the text of the CODIFICATION does not contain a restriction saying that the Treasury can only use the platinum coin provision to mint commemorative coins, that limit is pretty clear in the text of the full enacted statutes. Jonathan Adler goes through this pretty carefully at

The textualist argument against looking to the subjective intent of a collective body like Congress does not usually apply where the relevant purpose appears in the statutory text, rather than being gleaned from committee reports, floor statements, etc.

Michael C. Dorf said...

I'll take Paul's question as directed at me as well as at Neil and say this: Suppose the Administration were to say that it is minting platinum coins notwithstanding the fact that doing so would be tantamount to violating the debt ceiling but that anything else it might do would be unconstitutional, I wouldn't object to the use of the coins as the mechanism for violating the debt ceiling. But the proponents of the jumbo coin option have thus far offered it as a kind of magical way out of Congress's contradictory commands, and I just don't think that's plausible. If it were, then each of the prior increases in the debt ceiling would have been totally unnecessary.

AF said...

Professor Dorf: You seem to be assuming that being a commemorative coin and being legal tender at face value are mutually exclusive. But as Professor Adler acknowledges in an update to the post you link to, commemorative coins are legal tender at their face value. Adler concedes that this "undermines" his argument. Indeed it does!

Given that the Treasury can mint commemorative coins in denominations of, say, $100, and that these coins are legal tender, what basis is there in the statutory text to conclude that it can't mint coins of higher denominations?

Michael C. Dorf said...

I regard the fact that Congress has raised the debt ceiling 11 times since 2001 as pretty good evidence that nobody in Congress thought the platinum coin authorization was available as a means for substantially increasing revenue for the government. Also, the statutes restricting the face amount of paper money and other coins.

More directly to AF's latest point, it's true that commemorative coins are legal tender but the MAIN point of a commemorative coin is to generate memorabilia. What, exactly, would each $1 trillion coin be commemorating? Our government's dysfunctionality?

AF said...

I gladly concede that "nobody in Congress thought the platinum coin authorization was available as a means for substantially increasing revenue for the government" but as you know that is not dispositive, and in fact is largely irrelevant when the language of the statute is unambiguous.

As Professor Tribe points out, the fact that the statutes restrict the denominations of other bills and coins is an argument in favor of the trillion-dollar coin, under the principle of expresio unius.

Finally, the argument that a large-denomination commemorative coin would violate the statute because its main purpose is not to be commemorative seems wrong -- not only because it's unclear why a large-denomination commemorative coin intended to fund government programs is not a "commemorative coin," but also because a major purpose of commemorative coins has always been to generate money for the government. For example, a 2012 American Eagle One Ounce Platinum Proof Coin with a denomination of $100 will set you back $1892 at

Neil H. Buchanan said...

AF's last point clarifies why the second point in my post was correct. "[A] major purpose of commemorative coins has always been to generate money for the government." That's not what the platinum coin is doing here. It's not being sold to increase revenue that the government will add to its tax revenues, it's being loaned to the Fed in return for money, with the collateral to be exchanged for Treasury securities when more of those are authorized. In other words, these coins would be debt instruments, i.e., obligations.

As far as Tribe's expresio unius argument, my point (at a minimum) is that the current Supreme Court evidently doesn't view that canon as dispositive in a case that is eerily similar to the situation here. It's a fine canon, but it is hardly the only one that might be relevant.

Paul Scott said...

So, let's assume we call the platinum coin thing "ignoring the debt ceiling" - the distinction does not matter to me at all, so I am as happy on "ignore" as I am on "its a nifty little executive trick."

Why would it be preferable for the Fed to sell unsecured bonds at market rate than to have the Fed lend the Treasury money (thought the coin)?

Ryan said...

Previous Congresses raised the debt ceiling because authorizing additional debt when budgeted spending exceeds budgeted revenues is what responsible legislatures do. What is different is that we now have a Congress composed of a large number of irresponsible people who are willing to risk default in order to achieve their preferred budgetary policy.

Proponents of minting the coin are not proposing that we finance future deficits through seigniorage. It is only a stopgap measure to prevent default until Congress authorizes additional borrowing. That is why the Treasury would buy back the coin, not because of some obligation.

I ask those who don't believe the Treasury can do this, what limit should a court place on the size of coins?

tjchiang said...

I fully agree that it is important not to be snarky. But I find it difficult to see how issuing a platinum coin--which at least has the virtue of having a pretty intuitive and seemingly sound legal theory behind it--is more snarky than having the President issue a proclamation that the debt ceiling is unconstitutional under section 4, when nobody (ok, very few people) had thought the latter to be a reasonable legal argument until the crisis came up. In the annals of snarky moves that say "F*** you" to the other side, I find the section 4 move to be hard to beat.

My question is only for Prof. Buchanan and not Prof. Dorf, since the latter has not to my knowledge endorsed the section 4 route.

Sam Rickless said...

I'm with AF in this thread. Here are some general comments about purposivism as a method of interpretation, followed by how this applies to the debt ceiling issue.

Almost every single statute that I can think of has unintended consequences. Maybe there is a statute on the books that says that no company may merge with another when the single company that results would have a monopoly. Perhaps at the time of enactment the lawmaking body did not even consider utilities, which have a special dispensation despite being monopolies. Now the question arises whether two utilities are legally permitted to merge, thereby forming a monopoly. The answer to this question, given the statute, is clearly NO, even if had the lawmaking body thought about this case, it would or might have made an exception for the merger of two utilities. Indeed, even if many legislators had said as much in the legislative record, that shouldn't matter.

Those who are subject to law cannot reasonably be expected to work out for themselves what a collective body might or might not have intended (or what its purpose might have been) in passing a particular piece of legislation. All that those who are subject to law can reasonably be expected to know is what bill was signed into law. Perhaps if the bill is ambiguous, it is reasonable for those who are subject to law to look at the legislative record for evidence that would permit disambiguation. But otherwise, we are stuck with the statute.

For a Court to repair unintended consequences by trying to divine the collective purpose of the lawmaking body is to usurp the legislative function. If a law has unintended consequences, the way to handle the problem is to pass a new law making exceptions that will get rid of the unintended consequences.

The law says that "The Secretary may mint and issue bullion and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time." The law also allows for these coins to be sold, and the proceeds deposited in the Treasury.

So here we have unintended consequences with a vengeance. Congress almost certainly never thought to permit the minting of a $2 trillion coin as a means of getting around the debt ceiling. But what Congress did or did not think to permit is, or should be, legally irrelevant. By the plain meaning the Statute, Congress *did* permit the minting of such a coin.

Now I wonder whether I should have accepted the Buchanan-Dorf trilemma argument as readily as I did in a previous comment on this blog. This is because if the coin is minted and deposited with the Fed, there is no need to violate the debt ceiling by borrowing (no need to create new obligations that, when added to the already existing total value of debt obligations, exceed the Congressionally imposed debt limit), no need to cut spending, and no need to raise taxes. There is a fourth option, permitted by law. It is the *only* Constitutionally permissible option, and hence it is not only what the President is *legally permitted* to do, it is also what the President is *legally required* to do.

matt30 said...

I don't think it's right to say the coin would be loaned to the fed. Rather I think it's more accurate to say that the Fed holding the coin would be a bailment. When the debt ceiling is raised, the US government sells T-bills on the primary market (i.e. to the lowest bidder, not the Fed)and the income derived from that would be exchanged for the coin. It's no different than going to your local bank and exchanging your jar of pennies for dollar bills.

Michael C. Dorf said...

Just a small point in response to Sam: We say in the long article that a President is permitted/required to choose the least unconstitutional among his REALISTIC unconstitutional options, even though there might be some unrealistic technically constitutional options, where those are catastrophic. We mostly assume in the article that the jumbo coins would be unrealistic but say that if the markets would accept jumbo coins, then that would be a better course. So, if jumbo coins would work and are legal, then I agree with you. But the new wrinkle brought up by Neil's post is that quite apart from whether the markets would accept jumbo coins: 1) the best reading of the statute doesn't permit them to be used for this purpose; and 2) even if they can be used for this purpose, they may count against the debt ceiling, and so we're back where we started from.

AF said...

In a previous post, Professor Dorf wrote that he and Professor Buchanan had concluded that the word "debt" in the 14th amendment should be contrued broadly to refer to what the government "is legally bound to pay."

Now Professor Buchanan is suggesting that the word "obligation" in the debt statute would include depositing the trillion dollar coin with the Fed with the understanding that it would be bought back in the future. But surely the government would not be legally bound to buy back the coin. Is the argument, then, that the debt-ceiling statute applies to "obligations" that are not "debt," even under your broad construction of that term?

Bart Torvik said...

Interestingly, § 5112(k) is literally irreconcilable with another section of the statute it appears in, § 5112(a). Subsection (a) says that the Secretary of Treasury may mint only 12 particular coins, all of which have specific denominations. Then subsection (k) contradicts that when it says the Secretary can mint a platinum coin. In other words, Subsection (a) says "no you can't" and subsection (k) says "yes you can."

Subsection (e), which authorizes the minting of silver dollars, does things the right way by stating that it applies "notwithstanding any other provision of law." But those magic words (which appear in various forms nearly 50 times in § 5112) do not appear in the platinum coin section (although they did appear in the original draft of the bill, as did a lot of other language that would moot this whole argument).

So how are we to resolve this contradiction? Obviously, we interpret the statute as a whole. Specifically, we apply the maxim that a specific provision applies over an irreconcilable general provision.

The point, however, is that interpretation is required. And once you start interpreting this statute, it's pretty obvious where you end up: the trillion-dollar coin is an absurd sophistry that cannot be countenanced in good faith.

george said...

Obligations are things LIKE DEBTS and coins are CLEARLY NOT obligations. You would have to import intent again: "Surely Congress never intended for Coins to be Differet". The author is an idiot. Congress has ALWAYS had the power of coin seigniorage, since before the Fed EVEN EXISTED. SHUT UP.

Unknown said...

Professor Dorf,

"while the text of the CODIFICATION does not contain a restriction saying that the Treasury can only use the platinum coin provision to mint commemorative coins, that limit is pretty clear in the text of the full enacted statutes."

I am the co-author of the platinum coin legislation and I can tell you definitely that the intent was NOT to authorize a new commemorative coin. Moreover, if that had been the intent, the first coins we minted while I was director of the Mint would have been commemoratives, no? They were not. In fact, no commemorative coins have ever been minted under this law.

Your conclusions remind me of early observers of Mars using poor resolution telescopes who concluded that the planet was laced with canals. Of course, it was all a projection of their imaginations driven by preconceived notions and wishful thinking.

Unknown said...

Professor Dorf,

"So, if jumbo coins would work and are legal, then I agree with you. But the new wrinkle brought up by Neil's post is that quite apart from whether the markets would accept jumbo coins: 1) the best reading of the statute doesn't permit them to be used for this purpose; and 2) even if they can be used for this purpose, they may count against the debt ceiling, and so we're back where we started from."

Since Neil's argument is predicated on an incorrect premise (i.e., that the law was intended to authorize a commemorative coin), his, and your, arguments fail.

Sam's statements about divining legislative intent are sound, but even if you reject his argument, legislative intent contradicts your case.

On its face, the law authorizes platinum bullion (investment quality) coins, and the first coins we minted under the law were bullion coins. Bullion coins are not commemorative coins; their purpose and the way they are marketed, priced, manufactured and distributed are entirely different. Commemorative coins commemorate something; they are a way for the nation to honor a person, event or a place of great significance to our history. The images on these coins are emblematic of the commemoration. What do the platinum coins authorized by this legislation commemorate, I ask.

As Director, I sought authority to produce platinum bullion coins in order to have a product that could compete in international bullion markets. (Our gold bullion coin could not.) I wrote the law in such a way to give us maximum flexibility in designing the coin after conducting market research in the two primary platinum bullion markets, the U.S. and Japan. We did just that and within 6 months had an 80% market share.

As a by-product of the bullion coins authorized by the law, we also received authority to mint proof coins. By law, these are numismatic coins. Numismatic coins come in two flavors: circulating and non-circulating. Again, these coins have different purposes and are marketed, priced, manufactured, and distributed in entirely different ways. The accounting for these coins and the way they register on the federal budget also differ.

More evidence that the law was not intended to authorize the minting of commemorative coins: the platinum coin provisions were part of a larger bill that included reforms of the Mint's troubled commemorative program. After a decade of Congressional excesses with the program, we sought and won RESTRICTIONS on the number of commemorative coins the Mint was mandated to produce and sell each year. So does it make sense that the same bill would authorize MORE commemorative coins?

I have found opponents of the large denomination platinum coin concept typically make facile and uninformed legal arguments against the coin instead of dealing with it on the merits.

You are on a dead end street. I suggest you now turn to the merits.

Philip N. Diehl
35th Director
United States Mint

Michael C. Dorf said...

With due respect to Mr. Diehl, he is not the "author" or the "co-author" of the legislation. Congress is the author of all federal legislation and the meaning of our statutes is a complex legal question, not a matter that we divine by testimony of any single person, no matter how well-placed that person is. Indeed, it's notable that the advocates of the big-coin gambit were arguing that the TEXT authorizes it, regardless of the subjective intent of members of Congress. Mr. Diehl's subjective intent, while of historical interest, is essentially irrelevant.

Anyway, the country has moved on, as nearly all the players have realized how preposterous this idea has been all along.

Unknown said...

Professor Dorf,

I appreciate your respect, but I'm afraid you've confused "co-authored" with "co-sponsored". Inconvenient as it may be for your argument, I nevertheless wrote the law, made my case to the House Financial Services subcommittee chairman Mike Castle, who then sponsored and moved the bill. If you're familiar with legislative practice then you'd know how common it is for a bill to be written by someone other than the sponsor. In fact, I'd wager it's more common than the sponsor, himself or herself, writing the bill.

I'm amused by the fact that you're suddenly agreeing with Sam that divining legislative intent is fraught with difficulty. But you can't fight something with nothing, can you. So, unless you produce some evidence from the record of congressional consideration of the bill that contradicts me, and you won't, you're left with the plain language of the law where you find yourself empty handed.

It is also amusing how you implicitly concede the argument with a wave of your hand, dismissing it all as in the past since "the country has moved on". Funny how so many policy proposals arise, recede, arise again, recede again before entering the mainstream. Maybe like the idea of driving the country to default by refusing to allow Treasury to pay the bills for stuff you agreed to buy.

I'm hopeful that maybe "the country has moved on" from that one.

beowulf said...

"Suppose the Administration were to say that it is minting platinum coins notwithstanding the fact that doing so would be tantamount to violating the debt ceiling."

Except its not tantamount to violating the debt ceiling. Public debt subject to limit is measured by the sum of the face amounts of guaranteed principal owed to bondholders.

When Tsy sells coins to the Fed, its an asset sale. Tsy is under no legal obligation to buy coins back from the Fed, so it is not counted as public debt.

I know it feels like this shouldn't be legal, but it actually is. It does make me smile to see this denounced as a liberal plot. I have it on very good authority that the guy invented the trillion dollar coin is a Republican and voted for Mitt Romney last fall.

Finally, I apologize for the late hit, I didn't see this post until I saw Philip Diehl's response re-posted at

Michael C. Dorf said...

This will be my final post on this thread, which I had taken for exhausted a couple of weeks ago.

Mr Diehl: I wrote a follow-up to Professor Buchanan's post at
There I explained why it would violate Chevron to read the platinum coin statutory provision as delegating to the Treasury Secretary unlimited authority to mint platinum coins in the way that has been proposed. Nothing you say about your purposes in seeking the legislation or about how you used the authority it confers leads me to think I was wrong.

For the record, of course I understood you to be claiming that you wrote the relevant statutory language. But I took your first comment here to be claiming some sort of authority for your subjective intentions and expectations. Thus I was reminding readers that your views are not in fact authoritative, although they are interesting. Anyway, even you don't claim that the law was DESIGNED for the purpose of creating $2 trillion, as you said in your DailyKos post of 1/8/2013 that this is an "unintended consequence" of the law. I think you're wrong. Given the usual principles of statutory construction, authority to mint $2 trillion in platinum coins is not a consequence of the law at all. We can agree to disagree about that, but you don't get any special deference because you wrote the language that Congress enacted, just as I don't get any special deference in the interpretation of Supreme Court opinions I drafted when I was a law clerk there over 20 years ago.

Finally, now that you are a reader of my blog, you will discover that Professor Buchanan and I have been extremely critical of the congressional Republicans' efforts to use the threat of default on past obligations as leverage in negotiations over future spending. We happen to think that the platinum coin option doesn't work, but we have been urging the President to take a hard line on other grounds, and we share your worry that the Republicans may revive the threat of default in a few months. So ours is, or should be, an intramural disagreement.

Unknown said...

I'm delighted to hear that you're a critic of the GOP's efforts to use the threat of default as leverage in negotiations over future spending. But in that context, it surprises me that you have gone to such lengths to argue against the legal basis for using the platinum coin option as a means to counter that threat. The plain language of the law is clear, and there is nothing in the record of Congress's consideration of the law that suggests intent was different from the plain language, or at least you have not offered anything from the record supporting such a claim. In fact, the context in which the platinum provisions were enacted, including the commemorative reform provisions, undermines your claim that the law was designed to authorize commemorative coins.

As for your last fallback position, Chevron does not apply here for the very reason you state: it does not delegate to the Treasury Secretary "unlimited authority to mint platinum coins". The law delegates to the Secretary broad authority, but it is not "unlimited". For example, the law does not authorize the Secretary to mint any numismatic coin other than a proof coin nor does it authorize the Secretary to mint a non-numismatic circulating coin. The law does not authorize the Secretary to mint any coin other than a platinum coin or to sell either the bullion or the proof coin at prices below their cost of production. And the law does not authorize the Secretary to change the accounting treatment of the coins. I could go on.

I have no idea what you mean when you say that I claim my views on legislative intent are "authoritative". I am simply saying my views are relevant, and since no other evidence has been presented that contradicts my account of the bill's legislative intent, perhaps they're even persuasive.

Finally, a word about unintended consequences. You cited my statement that authority to mint a trillion dollar coin was an unintended consequence of enacting the platinum coin bill, but you omitted something else I said n the Daily Kos article: virtually all legislation of any significance has unintended consequences. For one example, consider the tax code and the feeding frenzy among tax attorneys to find interpretations and loopholes that were never intended by the tax writers. (As a former staff director of the Senate Finance Committee, I've observed this closely though I don't claim my views to be "authoritative".) Intended or not, many of those interpretations become a part of the tax law through IRS rulings and practices.

Unintended consequences are inevitable in the application of law to changing circumstances in the world to which the law is to be applied. The law is written in black and white--the world is not, and the law is written by human beings not by oracles, The law cannot anticipate all the circumstances relevant to its application; therefore it cannot foresee all the consequences of its application.

Paley Rene said...

The law is not clear, because there is no statutory definition of "obligations" relevant to this section. One of my research assistants was able to find a few definitions of "obligations" in other contexts. For example, 31 USC 3125 ("Relief for lost, stolen, destroyed, mutilated, or defaced obligations") defines "obligation" in a narrow way, but only for purposes of "this section." Other provisions that define "obligation" generally do so to limit what would otherwise be a broad meaning of the term.Cheap diablo iii cd key
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Unknown said...

Parley Rene,

I'm more than willing to hear your reasoning, but I don't see how the lack of a definition for "obligation" is relevant here. Do you find "obligation" used in this section such that it would need to be defined?

Also, since almost all coins produced by the Mint are authorized in this section, why would there be any greater lack of clarity vis-a-vis the platinum coin than with all the other coins authorized under this section. And what uncertainty flows from the lack of clarity you claim?

TruePath said...

Whoa, the claim that a trillion dollar coin is just like debt is so wrong I don't know where to start.

Debts taken on by the united states represent a promise that future US taxpayers will donate some of their economic production to the purchasers of the debt. So long as the level of debt doesn't become so large as to erode confidence in our ability to avoid default taking on new debt leaves the value of the dollars held by everyone unchanged and simply exchanges future economic production by US taxpayers for immediate economic value.

In contrast, issuing a trillion dollar coin creates no such obligation on future taxpayers. Instead, it has the effect of diluting the value of all US currency and therefore is effectively a tax on all holders of US currency (at a rate proportional to their holdings of US dollars). It thus spreads out the burden of payment across foreign and domestic holders of dollars and doesn't create a future obligation so it's not at ALL like a debt.


Also, I don't think it's fair to equate grants of discretion to the executive with the question of how to interpret congressional rules laid down for legal proceedings.

True, congress did not pass the laws controlling the mint with the intention of authorizing trillion dollar coins. But they probably didn't authorize it with commemorative coins celebrating a hypothetical SCOTUS decision recognizing the right to gay marriage yet surely you don't think that all laws come along with a permanent requirement that there every application be checked against the intent of the authorizing congress.

Besides, you could simply rephrase the claim as congress simply expected the executive to use it's discretion reasonable and the fact they didn't ever expect that behaving reasonably would include a trillion dollar coin is irrelevant.

Rules for judicial proceedings are a bit different. Necessarily such rules can't capture every last special case that may lead to absurd results. In this case, however, the question is whether we should assume that the statute implicitly granted the judicial branch additional discretion to rope in deliberate avoidance of the rule.

Also the very fact that this is still a case proves that it isn't immediate that the intent of congress controls.

Cicy said...

I wouldn't object to the use of the coins as the mechanism for violating the debt ceiling. But the proponents of the jumbo coin option have thus far offered it as a kind of magical way out of Congress's contradictory commands, and I just don't think that's plausible. If it were, then each of the prior increases in the debt ceiling would have been totally unnecessary. Cheap Fifa 14 Coins -2014 FIFA World Cup Brazil Coins
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