-- 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.]