Coins Against Crazies

About that $1 trillion coin. Hey, desperate times call for creative answers.

Comments: 325

  1. I was a bit surprised at the Ezra Klein article. There are millions of underemployed or unemployed Americans, millions of underwater homes and there are many other problems that were caused by the financial crisis and by income inequality. There is a Congress that voted to overturn Obamacare more than 30 times and made several other useless votes. Voters tried to get rid of many of them but they retained their seats through gerrymandering. Why should they be listened to given that their agenda is to benefit the plutocrats and voters would have gotten rid of them under a better run process? When an innovative solution is discussed to sidestep the problem Ezra Klein calls it Presidential overreach. Torture, warrentless evesdropping, drone attacks and many other actions fall into the category of Presidential overreach. Paying the bills using a platinum coin does not. However the whole debate is probably academic given who was chosen to be the next Treasury Secretary.

  2. The younger generation of pundits are funny line that. Both Ezra Klein and Matt Yglesias, at times, present a rigid streak. Maybe it's their youth, versus Professor Krugman's more, ahem, seasoned experience and pragmatism.

    If there is any overreach, it's been perpetrated by the GOP in Congress and the Senate with their almost complete obstruction of our nation's business.

    Either way, the Professor is practical and unwavering in his commitment to do the right thing, by whatever means necessary.

  3. The underwater homes and unemployment were not caused by the financial crisis, they are one of the major causes of it. I was not income inequality that had people refinancing their homes, buying ever bigger ones, SUVs, cruise vacations, entertainment centers, it was just plain economic ignorance and the belief they could beat the system.

  4. David Underwood: It takes the remarkable courage born of ignorance to post what you wrote. After all that has been written about the causes of the financial meltdown, you are still putting the blame on homeowners. Unbelievable.

  5. This coin idea is catching the scions of disaster capitalism off-guard. It's spoiling their whole nefarious plot. The plutocrats of Pete Peterson's Fix the Debt cabal, and the politicians who love and fear them, have been plotting to impose some pretty nasty austerity on a nation already reeling from the ignored crises of unemployment and underemployment, stagnating wages, and the worst income inequality in American history.

    If the powers that be think the coin solution is silly, then they'd better get it through their skulls that that wealth disparity is even nuttier. It'll end up killing them, too. According to a just-published study, even affluent Americans are dying sooner than their European peers. And now, people who can't afford vaccinations or sick days are spreading their germs to the oligarchs in a new flu epidemic. Fetch the monogrammed silk hankies, quick!

    It's getting dire out there. In one wealthy Manhattan enclave, a homeless man set fire to some discarded Christmas trees to stay warm. The flames spread to a building where three-bedroom lofts are going for $4.5 million. No plutocrat was injured. This time.

    But it's only a matter of time. Since we live in a country where the Silly Season never ends, and the other seasons are now Flood, Fire, Drought and Melt, we might as well let the farce be with us, and bring on the clown coin. It'll be worth it just to watch Pete Peterson lose his timing this late in his career.

  6. Why stop at one coin? Issue 17 of them.

  7. Brilliant commentary today, Karen--the farce be with us--can't stop laughing (through the tears).

  8. Want to really flummox them? Have the President announce he's having the Attorney General take up the 14th amendment issue with the Supreme Court AND instructing Treasury to be ready to mint the platinum coin(s).

  9. With the understanding that defaulting would mean an economic catastrophe that will make the Great Recession seem like a cakewalk, it is incumbent upon the Obama administration to do at least:

    1. Go on a campaign of teach-ins, ads by Robert Reich, you, Joseph Stiglitz, Jared Bernstein and any other authoritative economist to dispel the myths about the consequences
    2. Do media blitzes
    3. Talk about jobs again
    4. Refuse to negotiate with the GOP on the Debt Ceiling and end once and for all the notion that the presidency can be taken hostage

    if the GOP doesn't come to its senses,

    Mint the coin or invoke the 14th amendment. Do both! Anything that will prevent a calamity is perfectly valid and the patriotic thing to do.


    Keep the GOP's misdeeds in the front of public consciousness on the issue of obstruction, the US economy, and the GOP and DINO's pivot back to the NRA. Start the campaign for the 2014 election now. Nothing will change unless the face of the lower house of Congress changes. Nothing.

  10. the government can not default, they will pay the interest on the bonds, will hold back payment on internal debt, and furlough many government employees for the duration.

    Some jobs like ATC will slow down air traffic, hold of on funds to dredge harbors and rivers, hold back on farm price farm supports, no educational loans, transportation funds, an many more.

    So it will be the local economies that will lose and you van bet all those GOP supporters will have something to say about that.

    You have to understand what payments take priority, and which can wait. We did this in California not to long ago.

  11. Yes, we did. Those who paid for it were the weakest. But the hit California took is nothing like what the nation will suffer, should the GOP drag us down that path and the President doesn't make a bold move.

    I take the Professor's words at face value and place my trust in his assessment 100%. His record, unfortunately, is impeccable.

    The hit we would take by not having the debt ceiling passed would be catastrophic with the national economy recovering slowly the way it has been. We would also have a credit downgrade and the consequences for businesses and consumers alike would be enormous.

  12. I like this suggestion. I suggest the time has come for knowledgeable economists and economic historians to stand up and rally the American people. The slogans, “Fix the Economy”. “Put American’s back to work.” “Pay decent living wages.”

    Clearly, Congress must review the President’s Budget and complete their work by May. The Budget Resolution must be allocated to the Appropriation Committees and each of the appropriations bills must eventually come to the Floor, for discussion, for amendments, and for a vote. Some like to call this the “Regular Order”.

    This process will give every member a chance to express his or her views in Congress and at home and importantly will give the staffs a workout in public policy. Experts like Dr. K can also weigh in on the macro-economic effects of the spending actions.

    In parallel, the Ways and Means and Finance Committees can address the shamefully unfair tax code and maybe in less than 2 years of the 113th they may bring a reformed code to the Floors of Congress.

    We can do this and the American people deserve this over the uninformed discussions of "entitlement", vs other abstractions like freedom, free enterprise, etc.

  13. Print up a good 20 of those $1 trillion coins. We could use a little inflation in the country anyway: making an (enormous) assumption that salaries would increase, all of those over-inflated mortgages that recent homeowners are trapped into would be relatively reduced, and the super-over wealthy would become closer to the rest of us Little People. We could even pay away a good chunk of the federal debt too! Debts become lower in value with inflation, and we do not need any help from our dysfunctional congress to do it.

    Go for the platinum or rhodium!

  14. @Plantiful
    20 of those trillion dollar coins, huh? That might be enough to fix our infrastructure and rebuild our inner cities.

    Of course, those trillion dollar coins would soon be worth only half a trillion apiece in real dollars.

  15. I'm afraid that minting the coin is, due to the loopholed way in which it was conceived, is still less preferable to simply pointing out the clause in the 14th Amendment that the debt of the US shall not be questioned. The fact that Congress appropriated every cent to exceed our debt limit is comparable to the person who kills both of their parents and then throws him/herself on the mercy of the court as a poor orphan.

  16. The President should do both - let it be known he will use the authority delineated in the 14th amendment AND authorize the US Mint to create either a one trillion dollar coin (or smaller denominations up to or beyond that amount) and have it held in reserve (no pun intended) for use as needed by the US Treasury. He might even propose eliminating the 1917 statutory regulation requiring a debt ceiling to begin with, as it is not a Constitutional provision.

  17. I'd like to know why Paul Krugman does not think it "vile" for the Government to have saddled this country with 16.4 Trillion dollars in debt. Thats over $50,000 per person, or over $130,000 per person who works outside of government and healthcare. The average salary is $43,000/yr, so the steadily fewer people who think working is worthwhile is getting into some serious debt. I know Paul likes the idea that the Fed Govt borrows 43% of every buck it spends, but true vileness will be revealed when the lenders start thinking, "hey, those bums are going to default !"

  18. Lest you forget history entirely, well over half this 16.4 trillion dollars in debt was racked up by the last Replican president without calling it debt, actually, just 2 unfunded wars.

    All this current president did was to put debt that the previous administration amassed and actually put it on the books.

  19. You miss the point that it is the very people who now want to stop the limit, who made the debt in the first place, now they do not want to pay for it.

    It is the voters who saddled the country with the debt. They are the ones who told their congress people what they wanted, now that they have it, they do not want to pay for it.

    You can show all the figures you want, but you are not paying for it personally. In fact, I will give you odds, you get some of that spending that results in the debt. Chances are from reading your post, you are one who does not want to pay for any of it, but are quite willing to collect some of it.

  20. The notion that the government is about to default is ludicrous for any number of reasons. For one thing, our taxes are low by the standards of industrial countries and could always be raised. For another, spending could be cut. But mostly, our debt isn't too high, your misleading figures notwithstanding. Why misleading? Because they're cherry-picked to look scary. In fact, our debt isn't at dangerous or even at record levels: it was at 122% of GDP after World War II, after which we went on to a period of great prosperity and easily repaid the debt.

    As to the supposed burden of the debt, so what. The government in essence prints the money, then borrows it from itself. Inflation would occur if the government printed and borrowed too much, but that would require that the economy be overheated, and right now its under capacity. Indeed, reducing the debt by raising taxes or cutting spending would make us poorer, by reducing demand and thus economic growth.

    It's no accident that interest rates are low. With interest rates near zero, and no chance of a default, why wouldn't they be? The only way this will change is if the House Republicans actually perpetrate this insanity, and, ignoring both the Constitution and economists, force the government into default.

  21. Can't the president simply issue a finding that the debt ceiling statute is unconstitutional, since it is likely that it will lead to default under current circumstances and therefore goes against the 14th Amendment? At that point, he could simply ignore it, unless and until the courts decided otherwise.

  22. I've been wondering the same thing. I suppose the counterargument would be that he can cut expenses if the debt ceiling isn't raised. But that too would mean he would have to violate the Constitution, since Congress has passed laws funding those programs, and under the Constitution, he's charged with carrying out those laws.

  23. He could also file an action for declaratory relief, move for early action in any of a number of ways, and dump this on the courts and whoever shows up to oppose it.

    That would be fun, grown ups dealing with badly behaved children in public.

  24. The president has no authority to declare anything unconstitutional. But he can invoke the 14th amendment and ignore the debt ceiling statute. That's saying, in effect, so sue me -- in a case that even our current Supremes, those unabashed Republicans in robes, would be unlikely to touch. So why has Obama, in his mystifying high-mindedness, ruled out this course? Please, somebody, explain.

  25. You're right, Dr. PK that POTUS has no real choice here, since it is already law that the Treasury Secretary can issue the coin as she/he chooses, and the 14th amendment commands that the debt of the country shall be un-questioned.

    As you mention, the only other viable option is a Catch-22 where POTUS falls into a constitutional trap GOP'ers are trying to lay for him, forcing him to break the law,, one way or another, by not spending funds appropriated by Congress that he is required to spend, or by ignoring the debt ceiling.

    Another silliness we've heard mentioned is some Club-for-Growth nonsense about monthly cash receipts into the government being enough to pay interest on the debt, but not enough for Social Security and everything else, so the Treasury should pay the interest and then pick and choose among the other payment demands.

    By some twisted logic this would avoid a downgrade since default would be avoided.

    Nothing about ' the coin ' solution is as preposterous as such alternatives the GOP'ers and deficit scolds are proposing.

    Treasury should mint 1,000 coins valued at $100 billion each and stash them away to be used in the future if/when necessary - just in case House GOP'ers try to remove this solution from POTUS's arsenal.

  26. As I understand it, Congress has constitutional power to commit funding but doesn't have the power to stop the executive branch from issuing debt instruments. Congressional approval to raise the debt limit has become a tradition, but I don't believe that it's required in the Constitution. So is it really necessary for the President to engage in peculiar things like mint a $1 trillion platinum coin or issue scrip in order to get around the debt ceiling? Why doesn't he just cite the 14th Amendment clause that gives him the authority to meet U.S. debts? The Republicans in Congress will want to impeach him, but that's likely to happen no matter what course he takes, short of giving in to Republican demands on the budget. Granted, impeachment proceedings would be a terrible waste of time, but in the end the Republicans would likely get the blame.

    Or Obama could just do nothing and let the nation go to the edge of default. The "fiscal cliff" episode showed that Republicans actually can and will back down when faced with a determined president who doesn't give away the store. Perhaps Obama has learned a lesson about keeping one's spine stiff as long as possible. And I expect that he'd be supported by business and financial interests, who don't want to see the credit rating of the U.S. take a nosedive. So perhaps he should just tough it out and let the Republicans take the heat for any upheaval in the financial markets.

  27. The debt limit is statutory, not Constitutional, enacted in 1917 as part of the Second Liberty Bonds Act. The ceilng has been raised repeatedly, without raising an eyebrow (except by current Republicans), as needed ever since.

  28. I very much like the idea of the coin and "scrip" as done in California to shame republicans into action. However, since this Congress is shameless, it is going to take more as suggested by Rima Regas, to wit: conduct a multifacted media blitz to explain to Mr. and Mrs. Average Citizen some basic economic and constitutional principles that will expose this Republican "majority" in the house for exactly what they are: a group of childish zealots who put party ahead of country and are making a mockery out of our long-envied government system of checks and balances.

    I might suggest that the President make use of the brightest and most articulate among his Party to put forth his positions, much as he has made valuable use of the Vice Presidency, elevating it from a funeral attendance role joke to a vital player on the national stage as we've seen in Joe Biden. My votes for some of these best and brightest would include Bill Clinton, of course, our own Paul Krugman, Barney Frank, and Ezra Klein of MSNBC.

  29. This is where Bill Clinton could play an important role. I wish the Obama Administration would use his many talents.

  30. Personally, I've gotten beyond the arguments over whether we should mint the trillion-dollar coin. I think the real issue is what the coin should look like. I would make it about five times the size of a silver dollar, with Lady Liberty (sword in hand) on one side and the American Eagle (spread wings) on the other. We could use it for the coin flip at the Super Bowl if we somehow reached an agreement before then (not likely). Otherwise, we could deposit it in the Federal Reserve in a big glass case with a hammer and a sign saying "Notice from President to Fed Chairman: in Case of Emergency, Break Glass." It would also make a nice paperweight if the President wants to keep it close at hand. Just a thought.

  31. "Heads" should be the front end of an elephant. "Tails" should be its rear end making a deposit on the United States.

  32. at the super bowl, i could see the coin going up and never coming down, both teams having to spend two hours looking for it, "it's gotta be somewhere" and penn and teller shrugging in the stands, "we don't know".....

  33. There are many who think the Republicans are clueless, but I think the truth is that they know they are being irresponsible, they know they are being shameless demagogues, they know they are risking the entire economy of the country, but they don't care.

    And the truth might be much more sinister than them not caring, because the truth might be that they actually want the economy to collapse for some perceived political advantage.

  34. No, they think they are "right" about the debt issue--trouble is they also think they are "right" about climate change (by denying it), and any number of other issues on which they scoff at science (facts) and substitute their own particular brand of fairy tales. Why should economic issues escape the same distorted and uninformed thinking?

  35. I think they are doing what they always do, distracting us from the fact that they (the right wing republicans) are robbing the rest of us blind.

    Rich people, mostly republicans, pay half the tax rate that the rest of us pay -- they call their earnings 'capital gains', which should be taxed at the same rate as earned income but is now taxed at half the rate of equivalent earned income. It is a pure rip-off.

    Lincoln, incidentally, thought taxes on capital gains should be higher than earned income taxes, and Jefferson limited inheritance rights when he was governor of Virginia.

    There's plenty more. They would rather talk about silly stuff like gay marriage and abortion than about the really big stuff, taxes.

  36. If there is a political advantage to a collapsed economy it would be a big wet kiss for the 1% sitting on hoards of cash. The cash becomes more valuable at the same time that which the 1% doesn't already own becomes cheaper to buy, leaving the remaining cash available to buy even more politicians. Then the 1% really will own everything. If the Republican strategy doesn't seem to make sense to a normal American it is because the party is completely held in thrall to those who they perceive hold the keys to their future. We are in real danger of becoming the Banana Republic of the United States.

  37. The coin thing sounds silly but is no more silly than Congress. PK points out the key to the deadlock. The President has a constitutional duty to carry out the spending obligations approved by Congress. That duty trumps the debt limit which is merely statutory, not a constitutional requirement.

  38. The major fallacy is that "There might be enough sane Republicans that the party will blink and stop making destructive threats." There have not been sane Republicans in Congress for years, not since Big Right began to purge them from the party. A serious argument could be made that the insanity began with the inauguration of St. Ronnie The Dim, who spent his first four years taking a nap and the last four a victim of increasing dementia.

    The fact is that there is no hope of the GOP acting with the nation's best interests in mind. They only have the interests of their wealthy benefactors.

    But there is a much broader issue: How did the US end up being the world's only major democracy where its parliament first votes to spend the money and then gets to vote again on whether to pay the bills that come in after the authorized money actually was spent.

    I mourn for my nation.

  39. I think Denmark has a similar format - but they apparently also have responsible adults as elected officials.

  40. A paraphrased history of debt ceilings:
    "Congress has always placed a restriction on federal debt. The form of debt restrictions, structured
    as amendments to the Second Liberty Bond Act of 1917, evolved into a general debt limit in

    "Congress has voted to raise the debt limit 11 times since 2001, due to persistent deficits and
    additions to federal trust funds.

    "A Republican Congress raised the limit in June 2002, and by December 2002 the Republican U.S. Treasury asked the Republican Congress for another increase, which passed in May 2003. In June 2004, the Republican U.S. Treasury asked for another debt limit increase and again in October 2004, which was enacted on November 19, 2004. In 2005, reconciliation instructions in the FY2006 budget resolution (H.Con.Res. 95) included a Republican debt limit increase. After warnings from the U.S. Treasury, the Republican Congress passed an increase that the Republican President signed on March 20. In 2007, Congress approved legislation (H.J.Res. 43) to raise the debt limit by $850 billion to $9,815 billion that the Republican President signed September 29, 2007."

    We're a rich nation. We can afford it. Republicans spent us into this mess and approved it.

    This isn't about debt or deficits or debt ceilings.

    This is about Republicans, or Radical Conservatives and their constituents, who don't like Liberals, specifically a Black President with a name they object to, running government.

  41. Having worked in the marketing and branding industry off and on I can see great value in the coin idea. Why not make it a huge, prominently displayed, rotating icon on the roof of the Capitol building with accompanying security guards and tour guides armed with well designed brochures to explain what it is and how it got there. If nothing else, it may generate a few tourist dollars.

    As a home owner I have learned that being in debt makes banks take an interest in my economy. As long as the asset I borrow against is worth more that the debt and the debt is far cheaper to service than to pay off, I win and the bank is happy. As far as I can tell the US GDP-debt ratio is no worse off today than it was under Reagan. President Obama's administration needs to educate the citizenry about the value of debt. Branding this lesson with the coin icon sounds like good marketing to me.

  42. This wouldn't be happening if we didn't have a news media that's been absorbed by corporate mandates.

    If corps are people, too, shouldn't they also be the kind of people JFK spoke of when he told us to ask not what our country could do for us but what we could do for our country. At the time that sounded like a highfalutin cliche - we still had the draft, after all, so guys, at least, had limited options. (Women, of course, had less options yet).

    Imagine the looks JFK would get now if he asked that of the 4th Estate corp-people. They'd wonder who'll give him the dope slap and tell him to snap out of it. For one thing, they'd be sued by stockholders and turned out by the board of directors if they thought about what was good (or at least not bad) for the country rather than best for the corp's bottom line.

    Reality checks no longer fit the business model for the news media. Rather, it's "Where's the drama? Where's the conflict? Get it into 30 seconds. And don't kick the right wing hornets' nest or there will be you-know-what to pay."

    Conservatives used to stand for Responsibility, among other rock-ribbed, top-down virtues. Now, responsibility means taking care of #1 if you're a corp-person or a plutocrat. Acting responsibly is only for the Little People.

    "And here are the closing numbers: mendacity is up; common-sense is down; and 'providing for the common welfare' is at an all-time low. Back to you in New York, Jim." (And tip of the hat to the late Gil Scott-Heron).

  43. Bravo for that quote. I got the highest marks in my entire Bachelor's degree quoting that guy (and submitting early).

  44. Indeed, welcome to our new country, the United Corporations of America, with our Congress and state governments being controlled by corporate special interests and organized by those Koch (I prefer to pronounce it as use in cockroach) brothers) through the Americans for Prosperity, ALEC, Heartland Institute. Their future is Koch-sponsored education programs, minimal health care, if any, elimination of organic foods (except for the super-Elite), environmental destruction, minimum wages with Walmart and Target being the only stores (because that is all anyone will be able to afford), with smaller, specialized stores for the Elite. If you are not working at some menial job, considered yourself fired from the country.

    Let's get H.J. Res 88 moving through the house- get rid of Citizens United. See the bill on thomas[dot]loc[dot]gov, and call your U.S. Rep. Get rid of him/her if s/he will not co-sponsor and vote for this bill. Let's take back our country.

  45. Dr. Krugman: Fine column with one caveat: reducing federal spending may balance the budget but, as you have pointed out repeatedly, would weaken an already weak economy. To echo you, deficit reduction is premature pending economic recovery. What the U.S. needs are jobs and economic growth.

    The following axiom is on point: No one ever shrunk to greatness.

  46. Growing the economy would also pay off the debt and reduce expenditures for those in need.

    Shrinking the economy would keep the debt problem growing even with reduced expenditures, and that combination would produce desperate people, and civil unrest that would concern even those too self satisfied to care about desperate people.

    We have an example. This is not speculative. Greece right now has the shrinking economy problem, its debt ever more out of reach, and their society facing desperation for some that imposes unrest on all.

  47. As you have written in a previous column - unless the president does something like this he will be forced to do something illegal: namely, fail to spend money that, by act of Congress, he is legally obliged to spend.

    Perhaps the Republican strategy is to force default, and then impeach Obama for doing something illegal.

  48. Money is, most fundamentally, a convention to attribute work. Right now, the plutocrats attribute all too much money for themselves, and increasingly so. Thus work cannot be attributed correctly, hence the Greater Depression that we are experiencing.

    Please notice that the Roman economy was increasingly depressed for two centuries, before the final budget crisis and collapse. But things move faster nowadays, and the crisis is much greater, as it involves, for the first time, the fate of the entire biosphere.

  49. I remember the Republicans saying how disastrous it would be for the US to completely pay off its National Debt. Allan Greenspan testified to Congress to this effect. This was in the early days of Bush 2 when it appeared possible to actually pay off the debt. Where were the present voices decrying the debt then? The Debt only scares them when a Democrat is in office.

  50. I remember that too. They complained that a declining number of T-Bills would damage the financial markets and distort the economy. They said a steady flow of increasing Federal debt as T-Bills was essential to our economy.

  51. Actually paying off our debt would be disastorus for the world economy. We do not even have to shrink it. What we have to do is to invest in America, get the economy growing again and the important parameter, the ratio of the debt to GDP will go down. This is what happened in 1946 - 1973 when the debt started out at an even larger percentage of GDP.

  52. It was worse, they actually said it would be "immoral" to take taxpayers money to pay it off. They used that morality play to introduce the Bush tax cuts.

    Obama has now made them permanent.

  53. There was an article that I can not find now, that pointed out, the government can issue script in place of payments. I has been done before and there is no prohibition to do so.

    All that has to be done is issue IOUs, just like in the revolutionary war. When all those retirees start getting script instead of their SS check, and they have to sell them to a bank at a discount, how long do you think it will be before those good Tea Party patriots hear from their good Tea Party members, most of whom seem to be on SS?

    Do not panic, this is just a little tantrum by the recent losers in congress who still can not accept that Obama is still president. We went through this when Clinton was president, and congress got told to know off the games, and it will happen again.

    Just take your IOUs to your congress persons office and ask them to cash it.
    I wonder of the IRS will take those IOUs for payment of taxes?

  54. The problem with the scrip idea is that it is means testing in reverse. Those who do not immediately need the cash would sit on the scrip until the Treasury recalls it and pays it off at face value. Those who are completely dependent on their SS to pay their rent and buy their food could not wait, but would be forced to sell the scrip off to a bank or other buyer for whatever the buyer wants to pay. They would probably end up with something like 10 cents on the dollar, and would barely be able to buy enough dog food to stay alive.

  55. It the situation was reversed, and George Bush was President dealing with a Democratic congress, you can be sure, he wouldn't hesitate to mint the coin.

    How do we know? Bush used parliamentary procedure tricks to pass several disastrous tax cuts that contributed to moving trillions of dollars from the supply side of our economy to the demand side, and when the credit ran out, demand in the economy collapsed and nearly global civilization imploded. We are still clawing our way out of that one slowly, with no thanks to the Republican party that created the mess in the first place.

    Here the situation is - using a legal procedural trick we can avoid back sliding back deeper into Mr. Bush's lingering depression.

    Once upon a time Mr. Obama promised us audacity. Time to cash that in by minting the coin.

  56. My goodness, what a revised history we have. You'll recall, the Democrats took over Congress following the '06 elections and the Democrats Great Repression didn't occur until 2009?
    It is the Congress - specifically the House - that must originate spending legislation.
    Speaking of which, where are the promised jobs these across-the-board tax increases were supposed to create?

  57. This reminds me of magic rings and grand opera, but here it's platinum coins and soap opera.

    I want to tell the Republicans in Congress that they look like an impatient gardener trying to train a plant too quickly, and in so doing, snapping the branch instead of gradually encouraging it to grow in the direction the gardener prefers. Or as if they are trying to use a blowtorch (defaulting) to light a candle.

    I'm wondering whether acknowledging to the Republicans who want to play games with the debt ceiling that they can actually make more of a mess of this country than criminals and foreign enemies have might help them reconsider how much of their strategy is emotionalism and how much is statesmanship. Kind of like sitting down with Phaeton before his chariot ride to talk about how he really will hold the power and he really should try to use it wisely -- or risk becoming shorthand for weakness for generations to come.

  58. This silly suggestion may derail the confirmation process for the new Secretary of the Treasury. My guess is Republicans will demand the authority to issue coins be taken away in order to allow the nomination to go forward.

  59. Somehow, I don't think they need an excuse to derail anything anymore. They'll try to derail it because he's tough as nails as a negotiator and they hate that, not because of the coin.

  60. After all, the poor man is already known to have "irked" Mitch McConnell!

  61. If you are right, then he won't be confirmed at all. Maybe Obama will have to go outside his comfort zone in the ruling elite and appoint someone who didn't attend Harvard or Yale.

    But I suspect the Republicans are more likely to hold him hostage to get something in return. This may well be a part of the ransom.

  62. "(or many coins with smaller values; it doesn’t really matter)"

    It would be more practical to retire this later, if we decide to do so, if they were a bit smaller and could be bought back in stages. They might be billions dollar coins, or ten billion. We could retire a few at a time.

    We might even get a billionaire or two to buy one as a keepsake or to show off.

  63. Mark:

    Yeah, I was just thinking the same thing. Where do you think I can get my hands on one of those coins..........????...........Cool!

  64. Why stop with minting one trillion dollar coin when we could mint ten. We could not only solve our debt problem we could provide a hundred thousand dollar housing credit to ten million deserving families. What about a trillion dollars to rebuild our sagging infrastructure, that would help stimulate jobs, and bring in billions of additional revenue to our treasury.
    My favorite use for a trillion dollar coin would be establishing a small colony on mars, that would make our spirits soar, and vitalize our science and engineering communities.
    Of course nothing here is real because these three projects and seven others will never happen and all because we just never had the courage to mint those coins.

  65. Sorry, but you are repeating a common misconception here. The coin does not actually create any new money. It merely acts as an accounting trick to move numbers to different columns.

  66. Time to bring down the false firewall and recall England in the 1800s used the death penalty on children for stealing and picking pockets. Two hundreds later, they barely survived austerity. Which was worse? The question points to the moral dilemma at the heart of the fight over power, in which a freshman congress member from KY, in office in Washington for all of a week tells the New Yorker, "we were pretty bummed when the government kept running; bringing the government to a random standstill was the whole reason we became Republicans.” More: “We'll be paralyzing the government in the same building where John Boehner and Eric Cantor did it, and Newt Gingrich before them. It's like playing basketball in the same arena as Michael Jordan.”

    Sadly, he wasn't joking. It's a shame. From Falstaff on, the clown has been not only a inspiration but a source of levity and resourcefulness that points to the power of guile over force and stupidity. Laughter is always the best revenge for the confident and assumed. Ralph Ellison summed it up: “slip the yoke and change the joke.”

    Mint the coin. If we have to. He who laughs last, laughs best.

  67. This is a quote from Andy Borwitz's blog. It is satire, not fact. Does reveal a truth, however.

  68. That was a humor piece by Borowitz at the New Yorker.

  69. Those are facetious quotes are from an Andy Borowitz humor piece, not actual quotes from a reported piece. I'll admit it's sometimes hard to tell the difference between parody and reality when dealing with Republicans--many of their actual quotes are pretty crazy.

  70. Another suggestion I heard for dealing with the debt nonsense that makes sense is for the government to make certain to pay its obligations on treasury bills and bonds, but to put other spending into a priority order. We'd then pay defense costs and social security, but after that--we'd quit paying for stuff like the FBI, the courts, air traffic controllers, etc.

    There would be a public uprising and the Republicans would clear the debt ceiling in short order.

  71. Payments to defense contractors should be cut first, followed by closing of major military bases in the south, followed by the next least essential payments - congressional salaries.

  72. Start with Congressional salaries. Eliminate their medical care too. Let them feel a bit of what they would do to others.

  73. The problem with this is that this also puts the President in the position of acting in violation of the law, at least, and possibly the Constitution as well. The law (passed in the 1970's) says that the President MUST fulfill all expenditures passed by Congress; otherwise, it gives him in effect a line-item veto over the budget. This in turn triggers the possible Constitutional problem, because it puts the President in the position of making budgetary decisions (which the Constitution states is the responsibility of Congress).

  74. The trillion-dollar coin would certainly give new meaning to the phrase "spare change."

    The requirement for a separate vote to be held to raise the debt ceiling after laws have been enacted and a budget passed is an unfortunate example of American exceptionalism. In fact, it's as insane as the requirement of supermajority of 60 per cent for any vote in the Senate.
    I believe the framers of the Constitution believed in checks and balances, but not central government paralysis. Otherwise the union would not have evolved from the loose association of sovereign states.

    The debt ceiling vote is so noxious I'm surprised it has survived this long. This idiotic custom enables any Congress in political disagreement with the executive to render the national government a paralyzed deadbeat whose debt obligations would have as much worth as Zimbabwe's.

    And though no lawyer, the debt ceiling vote seems clearly at odds with the 14th amendment's specific affirmation of the legitimacy of U.S. debt and borrowing.

    Minting a trillion-dollar coin would be far less harmful than the legislature reneging on the just debts of the union as a tool of political blackmail. Despite its size and vibrancy, the U.S. economy can be destroyed, and this must not happen because reactionary legislators don't like public pensions and health care.

    Mint the coin and get a quick reference to the Supreme Court on the legitimacy of the debt ceiling.

  75. The brilliance of the "mint the coin" movement is that it shows that the the Republican Party is being driven by the real "crazies." Protecting US solvency, the world economy and our credit rating by whatever means necessary is perfectly rational. Indeed, it is the responsibility and sworn duty of every elected official to do so. If it takes a one trillion dollar platinum coin to do it, so be it.

    The GOP threat to put the full faith and credit of the US and its citizens in grave jeopardy to prove a ridiculous ideological point is completely insane. Only a bunch of crazy people would do that.

    "Mint that coin!" It is the only sane thing to do.

  76. I cannot agree with this platinum coin solution even if it can be done

    This is beyond undignified. If it is just two children kicking sands in each other's face, that is one thing. But the world is watching

    Airing dirty laundries for others to see is bad enough, but this proposed action will scare away many countries who hold America in high esteem

    America's reputation is the strongest currency. She should not do anything to jeopardize it

    Instead, if the Republicans clamor for destruction, let them shut down the government and bear full responsibility

  77. This isn't "just" about shutting down the government. This is about defaulting on expenditures they already approved. It's akin to signing a credit card slip for an item you want and then refusing to acknowledge the debt it yours. In my book, that is far more undignified than minting a trillion dollar coin and preventing a credit downgrade that will then set off an avalanche.

  78. @Rima - this is a fallacious argument for the so-called magic coin. America wasn't just playing in her own backyard if she did that. She is saying something to the world

    President Obama said America will pay her bills. And he is right. And people who have spent enough time here know I am no conservative. However, while I will support Mr Obama to push back, being cute is not a right message to the rest of the world

    Your supporting argument is exactly why we shouldn't do it. All the rating agencies will likely degrade American papers because once she crosses the IOU threshold, they won't have any ideas how far the partisan politics will play out

    In this case, the extremists of both the right as well as the left will be blamed for rendering America into a third world status

  79. No....bad idea...

  80. You just gotta love a GOP that has this sudden fixation and obsession with debts and deficits; surely those concerns weren't around when they went nuts with Uncle Sam's credit card and bought those two crazy wars, Medicare D, and that insane tax cut. After all, as W said, "it's your money". Sure it is, W; as long as we pay for it later, with big-time interest attached. Talk about the ultimate in dine-and-dash!

    Isn't it equally touching to hear the sudden heartfelt concern for our overall economy and running responsible budgets and balance sheets after handing over the keys to the banksters who looted our treasury, ran up huge real estate bubbles, and impoverished the middle class? I love how the threats amount to stiffing our bond holders and lenders abroad; I guess it's just a matter of finding a new sucker to shake down. The thought that the GOP already has, and is far too willing, to play with the full faith and credit of the US gov't so they can follow through on their nihilistic threats to bring down the President makes them exactly what Dr. Krugman accuses them of being: terrorists. This is purely embarrassing to be associated with such shallow thinking, evil people who will use any means at their disposal to blackmail the country. Only in America.

  81. Agree with your analysis. Except....(I feel like Don Q tilting at this linquistic windmill)....please (everyone) drop the use of "blackmail" in discribing the GOP position and use the correct term, "extortion". The GOP is not threatening to release some secret information to embarrass the administration or Democrats in general in order to get what they want. They are threatening to bring about catastrophic consequences if their wishes are denied. "Nice country ya got here. Too bad if somethin' bad was ta happen, like, maybe the economy crashin' ya back into the stone age."

  82. Since currency manipulation is the name of the game, and the only players are the Democratic
    Team, strike up the presses and save the world economy.

    The coin, however, must be massive to indicate the power of its heft and value. I suggest a
    Trillion Coin the size of the Mayan Calendar, quite suitable for public presentation in its roll from the U.S. Mint to the U.S. Treasury. Its importance will be emphasized by military bands, fireworks, and a lowering of the interest rate.

    The Republican Team will no doubt stand on the sidelines, watching the colossus roll by, and
    trying not to give in to the tempting thought of self-sacrifice under the coin of the realm Short of that, Speaker Boehner could lugubriously weep for lost fiscal conservatism.

  83. The problem with your view on the debt-ceiling is that people who aren't economists but constitutional lawyers disagree with you. Check out a featured piece today in your downtown nemesis that has things to say about the constitutionality of any attempt to invoke Section 4 of the 14th Amendment ( While I'm neither an economist nor a constitutional lawyer, seems to me the relevance of impeachment is far more pressing over such an issue than merely lying about sex.

    And your argument that the president breaks the law when he fails to spend money that Congress has appropriated is curious -- happens all the time, for a variety of reasons, often having to do with the ineptness of Executive departments to get their acts together. I haven't heard suggestions that we enact a set of misdemeanors requiring spanking over such failures in the past.

    I like the idea of the trillion dollar platinum coin, though. While we've just seen that a Republican House can compromise in the interests of the country, it's become apparent that a Democratic president can't, and is painting himself into a very small corner. Since we're on the very precipice of accepting that our government no longer works, perhaps it's time to accept what even FDR intentionally avoided: declaring a dictatorship.

    And what could be more appropriate to such an ending to the "Grand Experiment" than a trillion-dollar coin?

  84. I fully expect this Congress to impeach the president before their term expires-- on a pure Republican vote. I saw it once before, and Clinton's ratings soared into the 70% range. Clinton was impeached for having sex with a a young girl and lying about it. Nobody cared then, but to now impeach a President for attempting to pay the country's bills? How's that gonna fly? In any case the end result will be the same: acquital by the Senate.

  85. I agree with George. What's more, should they impeach him for that reason or similar, it will be the final nail in the GOP coffin.

  86. I am replying to george: President Clinton did not have sex with "a young girl." He had sex with a young woman. There is considerable difference. Sex with a young girl is statutory rape and illegal in this country.

  87. Given that much of this debt has resulted from GOP policies (preisential and congressional), they have to take responsibility for it. The President could do more point this out and the now unpopular roots of this (e.g., Iraq War). He also needs to point out that Social Security and Medicare have nothing to do with this. The media clearly has no understanding of any of this and the President can demonstrate leadership by "going over their heads".

  88. We'lll accept $3 trillion for the two wars even though Democrats called Afghanistan "the good war" and Obama instituted the surge there. Where did the other $13 trillion go?

  89. I actually think that these obstructionists should be incarcerated for holding our
    country at "gun point" and theatening to destrroy the full faith and credit of our US Treasury.

    Those who would thwart the payment of the US Government's financial obligations; should
    be actually impeached for their conduct; yest thrown out of office and replaced by responsible
    law abiding Congessmen and Congesswom; after all they all took the oath to preserve and
    protect out Constitution and to serve the interests of all US Citizens; and they theaten to bring the Government to ruin. Fankly I think they have aberogated thei oaths of office and shoulld be put in jail.

  90. The problem with impeaching Congressmen is that the House of Representatives is where impeachment takes place. If one cannot get a majority of Congressmen to vote to raise the debt ceiling, it seems certain there would not be a majority willing to impeach themselves. Also, to put anyone in jail, one must prove that person has violated a specific criminal statute. One cannot be convicted of a crime unless he commits a very specific act that has been previously defined as a criminal act by statute. America is not like Russia or the Roman Empire where one can be charged with a crime for doing something the King, the Czar or Emperor doesn't like. To my knowledge there is no criminal statue that makes it a prison offense to vote not to raise the debt ceiling.

  91. Don't think there's a provision for impeachment of Congress critters, only the Executive and Supreme Court. I coud be wrong, but I think the only way to remove Senators and Representitives is by recall election in their state or district. Usually what happens is the they get indicted or arrested and then they resign. Some don't until they're convicted, and the rare one goes to prison in office until the body votes to remove them, and an appointment by a governor or special election. But there's no way to to get most of these chuckleheads recalled because of gerrymandering.

  92. It is only possible to impeach "civil officers" of the federal government - it is un tested as whether or not congressmen are such.

    Unlike the UK impeachment here cannot actually imprison anyone.

  93. Invoking the 14th Amendment would immediately involve the Supreme Court. While that was languishing, where would that leave validity of bonds sold by Treasury?

    Also, the rampaging Republicans would start impeachment proceedings claiming the President's action amounted to egregious abuse of power, calling it a high crime, and thus impeachable. If a majority of Republicans, (the House majority), agreed and voted for impeachment, (indictment), we'd then have a Senate trial. It would require 2/3 majority to convict, which wouldn't happen. Trust of the U.S. would be crippled.

    The platinum coin method is already legal. It admonishes Republicans that they can either be responsible and raise the debt ceiling to pay our obligations, or they can be made irrelevant by the minting of a coin.

    The GOP is hoping to use the historically successful ruse of creating governing chaos and then claiming that they will restore order - since people tend to vote for order and a fig leaf of security when beset by chaos. However, it appears that unlike after 2008, Obama has kept his campaign PR crew together, a potent media voice to effectively expose the wide-ranging, nationally harmful, perfidious intentions and behavior of the GOP.

    By bypassing taking the debt ceiling hostage to favor less harmful methods, the GOP could begin regaining some credibility . Otherwise, the GOP needs realize they're in a lose-lose situation; each time they lose one of these their viability becomes more suspect.

  94. I am sure that, if Obama did this, the US Supreme Court would declare it illegal. At least four of the judges will be really eager to do so. The intent of Congress when passing the law probably wasn't to allow such coins and Scalia's constitutional philosophy will demand the narrowest possible interpretation --- which, conveniently, will also make Obama look bad.

  95. It is not at all clear that this would get to the 9.

    That requires a little more than Republicans being upset. Usually, someone has to lose a case at a lower level and appeal a constitutional issue.

    But if Treasury is allowed to mint a platinum coin, and they choose an unusually large denomination, where is the law and constitutional issue that will carry it up those SCOTUS steps?

    Of course, it would be very amusing to see a few hundred Republicans get apoplectic. I might have to stop working to watch Republicans change shades and rant live on tv. That would be worth about anything, even a trillion dollar platinum coin.

    They may even threaten an impeachment. Republicans should just plan to impeach all democratic presidents at the beginning of their second terms. It's worked so well for them in the past.

    We should have a contest for art for the coin.

    My submission is to have 'In Job Creators We Trust' on the head of the coin, and the backside of an elephant whose head is buried in the ground on the tail.

    Republicans deserve that honor.

  96. Justice Scalia is long past the point where he can make anyone look bad, except for himself.

    We know that four justices would side with Congress. That is not a majority. We know that Justice Roberts, when push comes to shove, doesn't automatically take a sharp right and is quite capable of keeping the nation's best interest front and center.

  97. Not so fast, MB. Justice Scalia will be the first to tell you that you don't look outside the plain reading of a statute to understand it, unless the statute is ambiguous. In other words, there is no need to decipher congress' intent when a statute is clearly written, as this statute is.

  98. Why don't we just borrow $10 Trillion and spend it as soon as possible? Let's give as much money as fast as we can to companies and individuals that contributed lots of money to the Obama campaign like to George Kaiser, the Billionaire from Tulsa, OK that donated $53,500 to the 2008 Obama Campaign and who bundled another $50K to $100k for Mr. Obama. He spent some time at the White house and took the half a $Billion in taxpayer money from the Obama Whitehouse and produced not one thing in return. This is just one small example of $Billions of taxpayer money that has been basically handed over to Obama's top campaign fund raisers without any credible due diligence on the credibility of the ventures. The January 1st, fiscal-cliff deal that the Democrats insisted on which happens to raise less revenue than the republican plan which would have kept tax rates the same but would have limited deductions provides even more money to the incredibly corrupt wind industry. Mr. Krugman is apparently out of his mind. Is there any limit on the inane spending that our government is currently propagating? Does it matter at all that we continue to pay $billions to favored individuals via so-callled "green" compaines that have lined the pockets of our political leaders with cold, hard, corrupt cash? How, Mr. Krugman, do you believe that this debt should be paid if at all?

  99. The point is not that the debt should be paid. The issue is the Republican refusal to raise the debt ceiling. Their refusal does absolutely nothing to lower spending or cut the debt, rather the refusal says that we aren't going to pay the debt we now owe, which apparently you don't want us to do. The coin option is a way to continue to pay our debts. If you want Congress to cut spending, please write your Congressional representative telling them precisely which programs you want cut. Don't be vague. Be very specific. And do a little research about the precise cost of the programs you want cut. You can find them in the historical expenditure tables here:

    Eliminating the Department of Homeland Security would cut $55 Billion from next year's budget.

  100. Campaign financing has completely corrupted our political system. But you're pickin some pretty small potatos to fry there.

    The investment in green tech is a drop in the federal budget (and arguably a wise investment, considering the alternatives. In fact, I would say the pitiful amount spent to address our dependence on unreliable (Iraq, Iran, Saudi Arabia, Venezuala, etc), and environmentally catastrphic fossil fuels is the real outrage here, not a few million lost on Solindra. Subsidies to existing technologies (oil and gas), far exceed what has been invested in green tech. But they don't talk about that on Fox, I suppose.

    Also, what insane spending are you referring to? Be specific, and give some actual numbers, on what you want to get rid of. But if you do, you can never run for public office as a Republican-they despise real math.

  101. How about this:
    Mint the coin and use it to back a $3,000 payment to every American with the provision that the money has to be spent within six months.
    This stimulus would be like a defibrullator paddle to the stalled heart of the American economy.
    And it would be popular.
    The Aussies got a lot of stimulus out of a thousand-dollar payment to every household when they got caught in the 08 crisis. It worked.

  102. If stimulus is used, think big.

    The population of the US is around 315million. Give everyone a million dollars, except for members of Congress and anyone whose last tax return showed a net income over a $1million.

    $315m is chump change in the scheme of government spending and that would certainly help people with medical bills, in foreclose, burger flippers, and all the low-income seniors.

    The President could do this by Executive Order.

  103. The president can't spend money outside the budget approved by Congress. As PK says above, its illegal for him to spend less OR more.

  104. Off topic, but I've been wondering for a while now... What would happen if you took some of that $2T or so sitting on corporate balance sheets and dropped it on the bottom 10% of the income distribution?

    Of course this could never happen in our political system run by the owners of those balance sheets, and because we're terrified that any downward redistribution of wealth (perfectly fine when it flows up) will turn us immediately into the Soviet Union.

    But what would be the effect of giving all those folks busting their butts for $16,000 - $18,000 a year say, $10,000? Sure, a fair amount would be wasted on booze and other vices, but even that would be stimulative. But I suspect most of it would go to productive uses. These folks have been getting pounded the hardest and looted the most for the last 30 years. There's a TON of latent, pent up demand. Just no cash in the pockets to pay for it.

  105. According to an informal poll I took, if such a coin were minted, the leading choice to go on it is Ronald Reagan. It would be appropriate on so many levels.

    Reagan is the president who officially declared government the problem, not the solution.

    Reagan exploded the deficit on his watch and also raised taxes.

    And, as a certain Republican sage observed, "Reagan proved deficits don't matter."

    It'd be a nice bit of karma, to say the least.

  106. Seconded; it would also shut up Grover Norquist, who's been whining for a Reagan coin for ages. What could possibly be better than the largest-value coin ever minted?

    For the motto, I propose that old favorite, "In God We Trust, All Others Pay Cash," and for the back of the coin, a donkey's hindquarters kicking out.

  107. I've seen Xaxnar's suggestion before, and it certainly has merit. However, I think that a $1T coin should have George W. Bush's face on it. President Reagan may have declared that government was the problem, but it was Bush 2 and his administration along with the Republican dominated Congress that definitively proved government could be a disaster.

  108. LOL, I love it. Or how about George W. Bush?

  109. Another solution that is well within the president's powers is to declare that, as chief executive of the government's agencies, the president is suspending all non-essential government services so as to preserve cash and allow the government to pay the interest on its debts, thereby avoiding default. In essence, Obama can declare that he is shutting down the government to meet his obligations under the 14th amendment. This is of course a temporary solution. One hopes that the citizens will call upon the Republicans in Congress to raise the debt ceiling to turn the services back on. No doubt, the Republicans will feel most of the heat from the public due to their unwillingness to compromise.

  110. Not enough money there. Likewise, he's required by law to administer these programs, including providing money that has already been appropriated by Congress to operate them.

    How long is temporary? until the next (Republican, in your wildest dreams) President is sworn in in 2017?

  111. Mint that coin and pretend there's no problem? The fiscal cliff business at least reminds us that there is. Our government has promised more than it can pay.

    Here's another solution. Create a tax form that lets taxpayers get a penny for every dollar they cut from the budget. Take a dollar from Big Bird and send me a penny, take a dollar from foreign aid and send me a penny, take a dollar from the energy department and send me a penny, and so on. This would improve the balance between the "general welfare" and the special interests that add up all those pennies to get millions and billions for themselves. The President seems unable to cut spending, and Congress seems unable, so let them ask the boss they work for: us.

  112. You mean I could state on this form that I am cutting $300 Billion from the Defense budget and I would then get $3 million back. Hey, I can do that.

  113. One can only assume that Andrew has a Ph.D in econ and knows more about economics and the liquidity trap than PK. Otherwise he wouldn't be confidently repeating VSP arguments about a totally artificial fiscal cliff -- which wasn't even a problem of too much spending, but too little.

    Don't just parachute in to read a PK column or two. Read PK's blog - regularly. And maybe learn something about what situation we're in with respect to the short and long term debt.

    For example:

    See, it's not what the VSPs have been saying. Macroeconomics is not kitchen table economics.

    BTW, it's good too see PK edging back in the direction of Obama invoking the 14th Amendment, though he doesn't use that specific term. The debt ceiling is about those bills - and only those bills - which Congress, not the President, has already committed - by law - to pay. The 14th Amendment is pretty clear that not to pay these bills would be to question the full faith and credit of these United States. And that is expressly forbidden by that 14th Amendment.

    I agree that the $1 trillion platinum coin option has to be kept open. But this will not be necessary. Obama asserts his obligation under the 14th Amendment, and that's it. There are some juveniles on SCOTUS who might try to overrule Obama, Scalia for one. But they're aren't five of them.

    John Roberts is too pompous to let his legacy be tarnished this way.

  114. If you eliminated big bird and foreign aid and the energy department, it would reduce the Federal debt by a rounding error. The pink elephant in the middle of the room is our obcene military spending (Afganistan and Iraq have always been "off budget" and have not been included in any official representations of how the Federal budget is split up, so the actual war machine budget is trillions of dollars more obcene than...)

    And forget Social Security and medicare, they are financed by a seperate dedicated flat tax (in the case of social security this tax only applies to the first $111,000 of income) and neither of these programs are currently in the red. While there is a future deficit issue with both of these programs, that has nothing to do with todays budget, and any adjustment in benefits is just another lie perpetuated on the American people wherein a dedicated tax to help the elderly, is robbed to pay for everything else. And remember, the trillions of dollars that have been stolen from Social Security amount to an excessive burden on the middle class (more acurately defined as those making under $111,000 a year, not $250, or $400 tousand), and poor. Every dollar that you make is Taxed for Social Security (up to $111,000). There are no tax refunds, or child credits, etc to claw back any of that money.

    The rich are laughin all the way to the bank.

  115. Since the days of Bill Clinton, the underlying strategy of the Republicans has been to control all the branches of government themselves or deny viability of control of the ones they can't control. From the Gingrich Revolution to the impeachment of Clinton, the budget 'showdowns', Tom DeLay's "Pay to Play" influence peddling, blocking Federal judge appointments, 'fiscal cliff' games, and soon another debt ceiling fight' which could give the House an excuse to start impeachment proceedings against Obama, the pattern is obvious, and it takes political gamesmanship to a new level.
    The point is that the Republican strategy is aimed at preserving the wealth and status of the party's clients, to the detriment of the nation as a whole. The uninformed and ignorant may receive some emotional gratification from believing they're on the 'winning team', but the only people who see any actual, material benefit from the Republican plan are...The One Percent. All the talk about saving Social Security or
    or reducing the deficit is a lot of hot air, the same 'blue sky' sales technique that gave us the Iraq and Afganistan wars. The real, underlying motive is benefiting the party's clients, the wealthy.
    It's long past time to begin broadcasting this fact whenever possible, however possible. Regan successfully labeled the Democrats as the 'tax and spend' party; somebody please come up with a nice quip to describe the party that throws most of the population under the bus.

  116. Yeah, they're only for the 1%, but they take equal or greater glee in making life as unpleasant as possible for everyone else.

  117. By "tax and spend" you mean Democrats actually pay down their debts. Perhaps the GOP ought to be labelled the the party that spends on my credit card and doesn't pay.

  118. Right, Observer. The Party of Cynicism is not interested in democracy, they're interested in power. So they lie (pretending fiscal responsibility, all the phony cultural wedge issues designed to distract and divide the electorate against itself), cheat (voter suppression laws), and steal (Bush v. Gore, take away women's rights on abortion, gay rights to marriage), extort (fiscal cliff, debt ceiling), and stack SCOTUS by grooming and appointing young far-right ideologues instead of legal scholars and wise men—all for what? Some great vision of the country and its future? Cynicism is toxic to democracy, and kills any sense of humanity in its practitioners (which is why they want to keep their own wealth instead of help the downtrodden). Cynicism is evil and must be stopped.

  119. Herein lies another ridiculous fact about people;

    Platinum is a rarer metal than gold, yet the price of platinum right now is $1,636 while gold is $1,673

    Make those coins out of gold.

    Like they always say, the markets are never rational.

    I'll be buying some platinum at the discounted price. ( In my wildest dreams)

  120. "Platinum is a rarer metal than gold" - No, it isn't. We don't really know which of the two is more abundant in the Earth's crust; but according to the latest data available (see, for example, "Chemistry of the Elements" by Earnshaw and Greenwood), about 1 part in 100 million of the earth's crust is platinum,whereas only 4 parts in a billion are gold. In other words, there's more than twice as much platinum as gold in crustal rocks.

    Of course, both numbers have relatively large uncertainties.

  121. Demoniations for gold and silver coins are fixed in law, set by Congress per the Constitution. The platinum coin idea comes from a recent law that allows the Sec. of Treasury to set the denomination of platinum coins at any value he chooses. It's a loophole. While it's too clever by half, it could save us from a financial crisis that would make the last one look like child's play.

  122. They can't be made out of gold. The Constitution gives Congress control over gold and silver coins. But not over platinum coins.

  123. Unfortunately, here we are again. The process is broken. The party system ceases to be effective or efficient. The urgency and the mandate which the public are crying for is being held hostage by partisans that have no nerve and no conscience. What's next rabbits? Smoke and mirrors? It's time for a system change, not just window dressing and scare tactics. Life goes on for the long term unemployed and underemployed. The middle class and their American dream has mutated into a nightmare. The hangover and the nightmare will be inherited by the next generation unless Congress decides that it is time to actually take a deeper look at how all of it became so irreparably broken. Examine the root causes of the issues. Our society must keep pace with technology. Our corporations need to start acknowledging that their consumer base is dwindling. We've been outsourced to the point of no return. The corporate coffers offshore are growing. Taxes are dwindling.

  124. Okay there may be enough Republicans who think that sabotaging and wrecking the national economy may not be in their political interests and some may actually put the nation above their political aims. Yet this is kind of thing will be a habit where the debt limit is extended month to month or every quarter. The debt limit statute is like an appendices, a useless and unnecessary organ which can fester and poison the system.

    Not only should the Secretary of the Treasury mint and deposit the Trillion Dollar Coin it mint several one of which should be deposited the before there is any default and the Republicans persist in holding the economy hostage.. As many coins as necessary should be minted and held in a vault at the Fed, so that the Republicans know that the president has the power and ability to see to it for the balance of his term. Multiple coins should be printed and held by the Fed in its fault because should there be is a vacancy in the post of Treasury Secretary, because the Republicans will never confirm another Democrat in this office.

    This is an inelegant device but it is a shield not a sward and it is protecting the nation from power mad cabal of ideologues with the intelligence of a bag of hammers determined to see that a minority cannot achieve by democratic means. Not to use this simple shied to protect the nation from political terrorism and thuggery would be stupid.

    The system is corrupted either way but with the coin the nation is saved.

  125. You're right, Moishe. Elegance is the least of our worries.

  126. One thousand years from now, scholars will read this article and wonder how on earth did the United States of America descend from its origins during The Enlightenment to our current state of affairs. They will ask what kind of decline could sweep over the greatest nation on the planet that would cause a Nobel Laureate to feel it necessary to write such an article. Anthropologists will use this as an example to demonstrate that evolution can move backwards and cause a species to regress.

    This debt ceiling issue is truly an embarrassment, for today's world and for our nations legacy.

  127. If we are around a thousand years from now the demographers will have a simple explanation of why we are where we are at. The cities that provide the dynamic, diverse and creative energy that fuels our society are politically impotent at the federal level.What is most telling that in a world that is increasingly more urbanized, in a country that is among the most urbanized 83% our urban population has less political clout than a country like China with less than 50% of its population urban.
    America's gun laws do more to reflect the paucity of urban power than all the political rhetoric we witness daily.

  128. Unless the US takes the lead in the greatest of all causes, mitigating climate change, the remnants, if any, of humanity existing in 1000 years time may well be too busy simply surviving to worry about the writings of a long forgotten economist in the long defunct NYT.

  129. A thousand years from now a greatly depleted human population will be in daily existential battle against the failure of the current generation to deal with global warming.

  130. "If we were to hit the debt ceiling, the U.S. government would end up defaulting on many of its obligations."

    Not necessarily. It could actually lay off a large segment of the federal workforce, eliminate or cut back programs dramatically, and actually try to live within its means. While this sounds impossible, we used to do this - or at least come a lot closer to this - up until the last two decades.

  131. The current debt "crisis" began with Ronald Reagan's tax cuts over 30 years ago.

    What you are missing is that Congress has already voted to spend this money. Congress can choose to pass a different budget resolution this year, or not. That is Democracy for you. Krugman hits it right on the head. For a certain segment of Congress to take the United States hostage because they didn't get what they wanted by democratic means is unconscionable.

    I've been complaining about the debt since Reagan. The only time it was adequately addressed was under Clinton through a series of budget cuts (remember welfare reform?), and tax increases. The economy was doing great (the longest peace time economic expansion in history). What happened next? Taxes were again slashed and the United States plunged back into deficit spending. Throw in a few wars, and a massive unfinanced expansion of medicare, and here we are.

    Raise taxes, a lot, on the excessive salaries and dividends of the elite. This will not only bring in desperately needed revenue (besides, the money is just sitting there because demand has left little opportunity for worthwhile investment), but a properly crafted tax policy, by discouraging excess profit, would lead to rising wages (better to pay your workers than have the government take it). Don't believe me? Look to the socialist regime of Dwight Eisenhower when the highest marginal tax rates were over 90%, and an expanding economy was truly lifting all boats

  132. "Live within its means." That is meaningless. Congress spends; this Congress likes to spend on powerful financial interests. It won't raise taxes on people and institutions that have lots of money - corporations, especially oil companies, big banks, very rich people etc etc. But it wants to cut outlays that benefit real people who need stuff like health care and education and food and jobs. A lot of the people who need government help are children - they benefit from schools and food and health care.
    " if the whole ramshackle structure of contemporary macroeconomics vanished into thin air and the field had to be reconstructed from scratch, the sentence which packs as much of the discipline into the fewest possible words might be ‘governments are not households.’ The principles of running an economy are in many crucial respects different from those of keeping your own finances in order. governments need to keep money moving around. For a household, to deposit the money in a savings account might well be the most sensible course. Governments, on the other hand, need that velocity – they need GDP. In order to get it, they sometimes have to borrow that first tenner [ten pounds], which they can do in a range of ways not available to ordinary citizens (who can’t, for example, just print the money). Once that first tenner is spent, the government’s hope is that it will continue to be spent many more times."

  133. Steve - Under Ike and in fact during the whole period from 1946 - 1973 we had deficits most of the time. The debt doubled. But as a percent of GDP it went way down. We didn't lower the debt; we grew the GDP.

  134. The solution seems simpler than all of this. If the debt limit isn't raised, make payments on the federal debt (as the 14th Amendment requires), and stop most other government spending. Let the American public if they like that result, or not. I predict they won't. But we shouldn't be afraid to find out. The only way democracy works is to show people the consequences of their choices and let them decide if they like it.

  135. This is a great idea. Perhaps the tea party group would finally realize how valuable government and its programs like social security, medicare, and a functioning bureaucracy really is. We might hear the end of the aim to make the government so small that it could be drowned in the bathtub. Another great consequence of waking the voters up to what they want from government would be for these same voters to send representatives to Congress who would either vote for a changed social program benefit or for maintaining the current level of spending on social programs or even increase it, but whatever the new representatives do they would be instructed by the voters to find a way to pay for it with either an overhaul of the tax code or an increase in tax rates with the tax code we have. We might even get a Congress that would begin to legislate again, which is what we pay them to do.

  136. Democracy works a bit like justice in the's the crazy people that are heard, while the sane ones are told to shut up and write the checks

  137. The American public already expressed their collective opinion in November when they reelected President Obama.

  138. I'm discouraged by mumblings from the White House that they aren't considering a 14th Amendment challenge, but encouraged that they have not taken the coin option off of the table. The debt limit appears to me to violate the 14th Amendment, but I'm not a Constitutional lawyer, whereas President Obama did teach courses in Constitutional law. At some point it should definitely be challenged, but perhaps now is not the best time.

    On the other hand, the coin option dives the Secretary of the Treasury the power to defuse a potentially highly disruptive situation. Could/would he do so without the knowledge and/or consent of the President? Would the President be willing to opt for that situation (or at least threaten to and do so if required) rather than (a) negotiate away the Social Contract of the New Deal at a highly inappropriate time or (b) stand firm and allow the Republicans to force government shutdowns in order to avert default? Does the President understand the global fiscal and political consequences of an extended shutdown or actual default? Would he rather negotiate with a majority of a majority (which is in fact a minority) of the House which is only one part of Congress rather than stand up for what would serve the country's economic interests -- or does he even understand what would be in the best interests of the country? My hunch on the latter is that he does not understand and neither do the advisers he has surrounded himself with.

  139. Shutting down the government won't do anything to avert default. They'll HAVE to shut down government because of default, because they will no longer be able to borrow to pay for government at sustainable rates.

  140. I for one think the coin idea is funny, legal but funny. One upmanship at its finest. So people think President Obama will not invoke the 14th Amendment ? Are these the same people who believe a Harvard trained constitutional Lawyer named Barack Obama is not President or was not born in Hawaii ?
    Actually I thought why not just start minting 1000 dollar gold pieces to A) Pay down the debt, I mean how long will it take all the U.S. mints to mint up 17 billion of them ? The debt gets paid off, a thousand dollar goin coin would be spendable, traceable, tracing money going from clean to dirty is always a good idea. Generates taxes !! Or if we don't like that idea how about 1.7 billion ten thousand dollar coins ? Only to be exchanged between banks, oh yes thats right, bamks are no longer required to have depositers money in their vaults, how naive of me. Our money now is just electronic blips. Or someday to be worthless paper !!
    I must say those who digress so far from Dr. K's column, leave the space for the rest of us, your rhetoric or bringing up past indicretions of others leaves much to be desired.

  141. "..if the debt ceiling isn’t raised, the president will be forced to break the law, one way or another; either he borrows funds in defiance of Congress, or he fails to spend money Congress has told him to spend."

    Personally I still like the coin idea but when you put it like that it reads like a case of entrapment and since it is not appropriate, to say the least, for Congress to entrap the president, the president should look to the Supreme Court. The third branch of government should be called in to check and balance between the other two. Since the president enforces the laws of Congress and the Supreme Court interprets these laws according to the Constitution, the president should seek resolution of this debt ceiling dilemma from the Supreme Court. What would the current Supreme Court do? It should rule that the duty of the president is to spend what the Congress authorized, and then determine which authorized amount takes precedence, the budget they authorized or the debt ceiling they authorized. I would think the budget takes priority over the debt ceiling because otherwise it would interfere with the many budget decisions that Congress approved. The Supreme Court should be intervening in order to restore balance so my best guess is that eliminating the debt ceiling would be the safest bet, not interfering more than necessary.

  142. Aren't we in enough of as mess without getting the nuts on the Supreme court involved in it?

  143. Desmo,
    This is the way our government was designed to work, the three branches must check and balance. I hesitated to think this way at first because of the disasterous Citizens United ruling but I do believe it will have to go through the Supreme Court. Meanwhile we could use the platinum coin option.

  144. The problem with this suggestion is that this Supreme Court is wholly unreliable as an impartial judge—they are highly partisan.

  145. I'm not arguing with the premise of the platinum coin. Make a hundred of them as far as I'm concerned….just as a finger in the eye to those who would engage in this hostage-taking form of brinksmanship.

    But where do we go from here? When we have to resort to crazy parlor tricks for implementation of what was clearly the will of the people in the 2012 election, we have a serious problem. But the Sophie's Choice scenario for our president where he is forced to break the law by either failing to implement previously legislated spending or by raising the debt ceiling in defiance of Congress is more than a serious problem. Thats a constitutional crisis.

    Our government is not functioning and the we the people, the 99%, are up against the wall and completely fed up. Many are unemployed or underemployed. Some are facing foreclosure. Others are choosing between paying the electric bill and food. For all too many, a visit to a doctor is an unaffordable luxury. There is no more room for this kind of government paralysis in the lives of the middle and working classes. We need answers - not political games.

  146. the bigger question is whether Douthat (and Brooks) ever *listen to* (or read) Krugman. i see more evidence in Krugman's columns and his blog that he pays serious attention to other points of view than i've ever seen in Douthat's or Brooks' columns.

  147. On the Republican side, Arkansas has a new congressman, Tom Cotton, whose campaign was underwritten by the Club for Growth. He's unlikely ever to vote to increase the debt limit unless the federal government is eviscerated. Admittedly, neither of his Harvard degrees is in economics.

    As several columnists have pointed out (most recently Steve Coll at the New Yorker), gerrymandering by Republican state legislatures seems to doom us to Republican domination of the House until at least after the next census (2022 election). Coll notes that the Club for Growth is effective at finding ultra-right candidates, so there's likely to be more Tom Cottons. Perhaps the real question is not so much how the current debt limit crisis will be resolved, but whether the federal government's major civilian programs can be preserved during the upcoming years of recurrent appropriations crises, debt limit brinksmanship, and other right-wing attacks.

    Governor Scott of Florida just visited Washington, citing a "study" claiming that the federal government will never provide much funding for Obamacare, so that the cost to the state will be prohibitive (The Tampa Bay Times explains). While that study was bogus, its notion that Obamacare will go unfunded might be close to the truth. Certainly that's what Tom Cotton would like to see.

  148. Even without the gerrymandering i am afraid we are guaranteed a Republican house for at least two decades. Demographics dictate an ever larger Democratic majority coupled with urbanization and an extreme Democratic urban majority even in Red States. Even as Dallas, Atlanta, Houston and Nashville vote 90% Democrat Georgia, Tennessee and Texas will send more Republicans to Washington. Even states like Michigan, Ohio and Wisconsin will send inordinate numbers of Republicans to Washington.
    Here in Canada our Federal government does not reflect our social, ethnic and political diversity because our Conservative government with 35% of the electorate has virtually no support in our urban enclaves. To illustrate the point greater Toronto which is about 20% of Canada's population is divided politically by telephone area codes with internal Toronto phone codes showing no Conservative voting.
    The congressional district I lived in in Chicago voted between 93-97% Democratic gerrymandering only amplifies a pre-existing condition.

  149. Sounds to me like a perfectly reasonable solution to a perfectly unnecessary problem. I'd even agree to have that trillion-dollar coin engraved with John Boehner's face on one side and the Capitol Building on the other just to identify the source of that problem.

  150. Great idea Stu, but instead of honoring only Boehner, the coin should be a double headed Boehner-Bush with the capital on the reverse. And mint it from the cheapest of metals so it will be easily tarnished, just like the legacies of those it commemorates.

  151. I'd agree to have the coin engraved with G.W. Bush in his "mission accomplished" pose and the congress on the reverse since they are responsible for the tax cuts and unfunded wars that continue to plague us.

  152. Great idea!

    Can platinum be tinted orange?

  153. Some would say that our whole monetary system is a gimmick. It exists and flourishes as a result of social convention. Other systems of value in the world use cowrie shells or copper plates as exchange media. The brouhaha over the debt ceiling is the result of primitive thinking on the part of some members of Congress who see economics in terms of these fetishistic tokens--coins and bills. What better justice than to solve the problem for these benighted souls with a big 'ol coin that just like all the rest of the currency has only the value attributed to it by convention. Maybe this dramatic gesture will jar the Tea Party into cracking open their kids' Samuelson and learning Econ 101.

  154. I agree with most of this post. Sometimes when I go to the grocery store to buy something, I chuckle a bit inside (doesn't hurt). Money is funny, you see. I pick up whatever I think we need, hand over some pieces of paper and everyone is happy. It is only because we have all agreed that those printed paper things are valuable and useful that they are just that. Otherwise, they would be a waste of good ink and high quality paper.

    The whole economy is a laugh riot. You work hard, get a job, take abuse, do the best you can and the first thing you do when you get a check is run somewhere and hand that hard earned money over to someone else. You can't trust yourself with money! Don't be a fool.

    There is a underlying, if bogus, point to some of what the tea party crowd and other radicals want. They believe that things have gotten out of hand and they'd really like us to return to money which is more "real", which is based on some basic, widely acceptable value, like gold. They are, in essence, unhappy with the biggest, richest economy (in a single nation) the world has ever known. They want to wreck our house and expect us to play along....with their cruel joke.

  155. The Republicans are showing just how much they live by the "Our Way Or Else" mantra, which I just realized is "O Woe" in short form. They have shown an adherence to the principles of power before absolutely anything else, including principles and governance. Since they keep talking about doing things on principle--and since, as a political party, they should be interested in how governance works--I routinely find this mind-boggling.

    I think he should mint the coin, then have the mint sell commemorative photos of it for a reasonable price. Not only could we set it as our wallpaper on our computers, we could help pay down the debt a little bit too.

  156. "U.S. government as a whole (which includes the Fed)" This is incorrect. The Fed is a private bank, owned by shareholders. It is not part of the government.

    "Printing money is not inflationary." this is nonsense. Money created by a book keeping entry has no intrinsic value, therefore it must steal value from the already existing money.

    "The fed can offset withdrawals though further borrowing" Banks borrowing from banks in a fractional reserve financial system is inherently inflationary, as the money is not lent, it is created. Look it up.

    Debt based currency has failed throughout history. You cannot significantly lower the deficit in a debt based financial system, and expect there to be any money to for the system to function on, anymore than you can legislate your way out of 2+2 equaling four. Capitalism/fractional reserve banking requires infinite growth, because of its by-product of infinitely rising debt.

    The only way money enters our financial system is through loans at an interest rate. The only way to eventually pay the interest, is to interest. The amount owed in this scenario, will always exceed, the amount of capital in existence.

    The arguments of how to deal with a self defeating human contrivance, in the wake of technology, that can feed a million where one hundred were fed before, are there for no other reason than to keep the layman, occupied and distracted.

    An umbrella full of holes will not keep you dry no matter its color.

  157. "The only way to eventually pay the interest, is to interest."

    Not exactly. Loans are taken against future income from productive work that is made possible (financed) by the loan. Interest is calculated according to the degree of risk regarding repayment, so there is typically a range of riskiness from lower to higher. The possibility of economic growth stems from the possibility of increased productivity made possible (financed) by loans. Paying interest (& principal) ultimately should come from increased productivity, not from further borrowing.

    Some loans fail, but in normal times, such failures should be folded into the assessment of risk. The housing bubble and the related financial crisis of 2008 were a failure of the financial system to properly identify the risks at hand, that resulted in a casino mentality (zero-sum: my gain is your loss). Let's not forget that some people made killings in the bursting of the bubble in 2008. Not least among them were homeowners who were able to sell at the top of the market.

  158. There are too many fallacies here to rectify, but to take just two: (1) the Federal Reserve Banks are federal instrumentalities whose profit belongs to the US government and whose policy is set by the Board of Governors, a federal agency, and (2) the amount of debt owed does not exceed the capital it provides, because the value of the debt is eroded over time by inflation, and the capital grows through investment.

  159. Printing money during an economic downturn is not inflationary. One need not be a Keynesian to see that the macroeconomics textbooks are correct in describing the positive effects of expansionary monetary policy in dealing with recession. If this is nonsense, then all of the textbooks are wrong. Perhaps so, but that is extremely unlikely. Modern money is all fiat money (without intrinsic value). It gets its value because people are willing to accept it in exchange, trusting that it will continue to be acceptable when they try to spend it. They don't lose that confidence unless the monetary expansion is excessive (and therefore inflationary). Similarly, banks borrowing money in a fractional reserve banking system is no more inflationary than commodity currency, such as gold. In either case, excessive monetary expansion can be inflationary, whether it is a gold rush or Fed action. That is a far cry from claiming that monetary expansion is inherently inflationary. Clearly that is not the case, or we would have a high rate of inflation today.

  160. Our $16 trillion debt is being projected to be one hundred trillion.

    Confidence in our nation's solvency could perhaps be reassured by a maximal geological mineral survey using state of the art technologies, including both above and below the ground.

    Enormous mineral veins lie undiscovered miles underground.

  161. In addition to the 60 to 70 tea party obstructionists in the House of Representatives, the other big problem with the debt ceiling vote is John Boehner, author of the Boehner Rule.

    Boehner has said since being elected Speaker two years ago that no votes on legislation can take place in the House unless a majority of Republicans are supporting the bill. This blocks compromise before it can begin, because the Democrats and the president cannot try to carve out enough votes on legislation by winning over the requisite number of Republican votes to pass it, they have to get a majority of the Republicans, even to get a vote on a bill. This is a formula for stalemate and repeated national brinksmanship. (Boehner waved his rule of thumb for the recent fiscal cliff vote.)

    Why hasn't this rather stark fact not been reported by every major newspaper, television network and cable news channel in America? The entire mess can be laid at the feet of John Boehner because almost no progress is possible under the Boehner Rule. He might not have started this mess, but he makes it far, far worse every time one of these do or die confrontations is allowed to go to the 11th hour.

    Why is he imposing this arbitrary standard? That's for him to say, but there is little doubt that doing so creates political cover for Republicans and prevents informal, case by case coalitions from being created to pass needed legislation.

  162. Given that parties are extra-constitutional this is odd for a bunch of Tea Pots who claim they worship the very shadow cast by the Constitution. Let the House of Representatives represent without restriction.

  163. The 'majority of the majority' rule has been around for a while and pre-date Boehner; clearly it's anti-democracy when you can't even get to vote on something unless over 25% of those elected agree to the vote.

    There may be a small light at the end of the tunnel given that Boehner ignored the rule to get the vote for avoiding the 'cliff' through.

    Why hasn't it been reported more? Because friends of the rich right wing owns the majority of the media. e.g. Rupert Murdoch.

  164. Doug,

    Actually it's the Hasert Rule, after former Republican Speaker Dennis Hasert.

  165. The Republicans have been using legal technicalities in ways that defeat or reverse the spirit of the laws. Because of the overused filibuster, for example, it now takes 3/5 of the Senate rather than a majority to do anything at all. The Senate fell into this new situation without ever officially discussing its desirability, but the change should have occurred as a result of a constitutional amendment.

    We have the political equivalent of Gilbert and Sullivan plot lines. Our economy is tied to the tracks, rescued at the last minute from one onrushing locomotive after another. The trillion dollar coin belongs here.

    The ability of our government to deal with problems is as real as the emperor's new clothes. Everyone knows the system is broken, but the only way to make it to tomorrow is to pretend it isnt and go through the motions. The trillion dollar coin would make this situation platinum-clear.

  166. It's more serious that the House of Representatives is no longer representative. Though the big money didn't work in the presidential election or for the Senate, in conjunction with aggressive gerrymandering, it was quite effective in the House. Though the Democratic Party candidates got more votes, they wound up with only 45% of the House of Representatives.

    In other words, the part of the government that our Founding Fathers deliberately intended to be most responsive to the will of the people is now completely unhinged by the neo-GOP. Rather amusing that so many of them claim to be conservatives.

  167. I don't think anyone would say that conservatives like democracy.

  168. Let's think about this. The economy show no signs of getting any better in the foreseeable future so revenues won't increase without major tax increases which will be counterproductive. Cutting spending by the necessary 20% or so, seems impossible. So, do we default now or later, and what are the consequences? Do we continue with increasing deficits, and what are the consequences? Are we unavoidably destined to a European like meltdown along with the associated social unrest and chaos? Has the stock market become so surreal it no longer reflects the true economic state of the country? There are many opinions but no answers. I guess we just sit back and enjoy this fiscal sliding board and hope we land in sawdust not quicksand.

  169. Unless we do something idiotically self-destructive, like failing to raise the debt ceiling, it is absolutely impossible for the U.S. to default. We have our own currency.

  170. What we do is that we don't cut spending now while the economy is still recovering. We let government spending support the economy until it is growing again, and then the increased tax revenue from a growing economy will take care of the budget deficit all by itself. Remember the Clinton years?

    The national debt is another matter and its growth must be slowed in the longer run, but a growing economy, a balanced budget in a growing economy, and a little bit of inflation in a growing economy will erode the debt over time.

  171. Your premise appears to be entirely wrong.

    1) The economy does appear to be on the mend - just slower than we like - as household debt shrinks over time.

    2) Major tax increases on the wealthy are NOT counterproductive, and nonpartisan congressional studies have said as much.

    This can be understood intuitively.

    The combination of Bush policies resulted in at least $10 trillion being moved from demand side of the economy to the supply side (the rich). The rich are supposed to invest that money to create jobs. But they arent. The reason, not enough demand. See the first sentence of this paragraph as to why. So trillions of dollars sit idle, (as do millions of workers). The important thing is to move that money back into the commercial economy - as either investment or spending. The rich refuse to do either. Enter higher taxes on the rich.

    Since the money isn't being used, taxing it will not hurt the economy. Since the government will use that money, it will improve the economy by creating either demand directly, or indirectly through investments in things like infrastructure, which have the nice benefit of improving the nations efficiency, productivity and competitiveness.

  172. The coins could be deposited at the Federal Reserve. They could also be sold, and sold at one price with the promise to redeem them at a higher price at a future date.

    If this sounds like issuing bonds, it is. But it might also be good marketing--who wouldn't prefer a nice big shiny coin to a piece of paper. Call them coin bonds.

    All perfectly legal. Bring it.

  173. I favor the coin, myself, because I do not trust the Supreme Court to interpret the 14th Amendment in the proper way. Let Obama play a little hardball for a while.

    If it were possible, I would love him to suspend all payments for salaries and office expenses and support personnel to all GOP Congresspeople, and cut all governmental assistance to red states and districts, which claim they don't want it after all.

    Something very dramatic has to happen to break the stranglehold the lobbyists, the war profiteers, the banksters, the Wall Street speculators and the plutocrats have now over this country. It may take a new revolution/civil war. We cannot have gridlock now, gridlock tomorrow, gridlock forever.

    I hate what has become of our country, and I largely, though hardly entirely, blame the GOP, of which I was a member for decades, for that.

  174. I was 11 in 1954 when the Army McCarthy hearings were broadcast on our newly acquired TV. I could see, even at that age, that the Republicans were ruthless opportunists who would use any and all of the self generated paranoid fantasies to manipulate the voters into electing them. What took you so long?

  175. I would wager that President Obama wishes he could have back the vote he cast while a Senator in which he opposed raising the debt ceiling (he also missed a couple of votes on the topic). I believe that this vote somewhat undermines his position on the topic - and I say this despite general support of the constitutional description Dr. K gives, in which he points out that Congress already has to pass the spending authorizations. I would not swear to it, but I think I recall that he stated at the time that his vote was essentially symbolic.

    I don't think the President will go for either the platinum coin or the 14th Amendment approach, and I don't think it will be due to what Dr. K and others have referred to as the potentially "undignified" nature of the approach. I think the reluctance is one that all Presidents feel about courses of action that are both risky and somewhat uncharted in terms of precedent - they have a huge incentive to avoid creating potential constitutional crises. There's huge downside to having a pitched battle over either approach, even if the actual conflict is created by the other side.

  176. The fact is that no Democrat would have pushed the country into default, only Republcians do that.

  177. What you can never change your mind? You can only vote one way for the rest of your political career?

    If that was the case, the entire Republican party would have to resign.

  178. Thought experiment:

    Ronald Reagan or George W. Bush is prosecuting World War III. The Democrats, who control the House of Representatives, block a debt-ceiling increase, thus denying Reagan or Bush borrowing authority to continue the war. Reagan or Bush, saying they are legally bound to defend the nation, announces that the debt ceiling is unconstitutional in that it prevents the Executive from complying with the Constitutional obligation to "take care that the laws be faithfully executed" (Article II, Section 3) and directs the Treasury Secretary to move forward with uninterrupted borrowing to meet existing government obligations, all of which have been voted into law by previous Congresses.

    Why can't President Obama proceed on this basis?

  179. He could. So far, Obama and his spokespeople are saying he won't. My guess is that they are trying to say to Congress that things have to be handled in an orderly manner, so they are going to be orderly as a matter of course.

    They are showing too much deference to a Congress that does not want to resolve the major issues facing the country. My own guess is that if Congress tries to play this thing out they way they did previously in 2012, some "creative" measures will be taken. Of course, certain Republicans would like nothing more than to get an issue on which they could impeach. Since they have a majority in the House, they would be fairly well assured of passage, then the measure would die a quick death in the Senate. Damage would be done to the president and the presidency, but it worked last time to help swing the White House to that good ol'boy, G.W. Without Clinton's impeachment, we can be fairly certain that Gore would have been elected as president. Think about it. No war with Iraq and maybe no lingering financial crisis and recession for the last four years.

  180. To use a family analogy, the debt ceiling crisis is like the children coming in and preventing Mom and Dad from paying the credit card for the food, gas, tuition, utilities bills incurred over the last 11 months. This would be because Mom and Dad aren't spending enough on the kids' videogames.

    Does that help explain it?

  181. This stupid coin talk needs to stop, it is completely wrong because it distracts from what needs to happen, regular governance. The GOP has to force the Senate Majority Leader to do his job or our economy is doomed. Inflation is running rampant just look at food prices. We need to reduce spending, stop the Fed's endless QE program and get the economy back growing again. If Reid won't do his job and we can't keep spending, the GOP has to push the debt limit to achieve the required result. Force Obama to concede, reduce spending, agree to a budget & tell Harry to pass it. The deception is over we see what Obama & Reid are doing and we are prepared to take the hard road if necessary to get spending reduced.

    The people & Countries holding our debt want to see the USA begin to put it's fiscal house back In order otherwise their investment will deteriorate and lose money. If we don't cut spending we will see the T Bills held come washing up on our shores as they are sold off in mass creating a run the Fed will never be able to address. That is the doomsday we have to avoid and a real budget that slashes spending can prevent it. Now is the time to get it. Defaulting for a few weeks while we show the World we are serious about correcting our fiscal balance sheet will not be pleasant but it will not create the chaos you espouse, because the ratings agencies will see what we are doing and people will know the USA is correcting its bad spending habits so the investments will be safe.

  182. Where were you when the Republicans exploded the debt by starting two wars, cutting taxes for the rich and creating the largest entitlement program since World War II (Medicare Part D)? All of it done by a Republican President, Republican Senate and Republican House of Representatives and, of course, all unpaid-for.

  183. How about trying to explain exactly how cutting spending will result in economic growth. In fact, this prescription is exactly backwards, as austerity programs have documented throughout Europe. And as if this had to be pointed out, there is no inflation in the United States. The inflation rate based on the consumer price index (of which food costs are a major component) is currently less than 2% annually. A big part of the problem with the fiscal policy debate is that a lot of folks with strong opinions are ill-acquainted with basic economics.

  184. Hmm. Folks are going to dump T-bills because the price falls and return rises.

    How can there be a run on a bank that, by it's very definition, can never run out of cash?

  185. The Republicans are not just threatening to dine and dash, but to explode a constitutional, and worldwide financial crisis, "unless they get spending cuts that they weren’t able to enact through normal, Constitutional means".

    Does the average voter know this, and why? Or that we have almost fixed the spending problem the Republicans created? Do they know we don't have a problem of exploding Medicare and Social Security; if we fixed our for-profit healthcare problem, we'd be running surpluses? Does the average voter know that we have a spending cuts and under-investment problem, that's keeping unemployment up? That we can fix territorial tax dodge schemes?

    When newspapers of record, like The Economist, pretend cuts to Medicare and Social Security are the solution, citing The Committee for a Responsible Federal Budget (Pete Peterson) as an "independent watchdog" you know that voters are being mis-informed by the powerful, and not for the public good.

    The corporate interests that control Congress, and to which our tax dollars flow, are affecting the news voters hear. The news media has not effectively debunked key falsehoods; for example that President Obama wants unlimited spending power, entitlements and the economy will become sustainable through cuts, that Republican's number one priority has nothing to do with protecting our future, nor creating what they called their number one priority of jobs, jobs, jobs? It's about looting our economy, environment, and taxpayers.

  186. President Obama could always adopt the strategy of immediately and cheerfully embracing any idea the Republicans advance. Since their only agenda is to be against anything he says or does, their brains would soon explode and gridlock would be solved.

  187. While I would love to see Republican brains exploding, their ideas are so crackpot and destructive that if the President adopted them the country would soon be in ruins. No, President Obama is just going to have to continue playing hardball with the GOP, like he did with the "cliff" deal. That will be safer for the nation and the GOP's brains will still explode. As it is, they're still cleaning the mess off the walls from the "cliff" negotiations!

  188. Isn't that pretty much what Clinton did to the Republicans? Wasn't he accused of co-opting all their ideas of changing welfare, and various other issues, and thus making the Republicans agree to things that they claimed they wanted done but were not probably going to ensure got done until they were literally forced to do so.

    Newt played a big game and lost not once but twice to a man smarter than he was.

  189. I think that we the people need to face the fact that conservatives hate the governemnt, the American governemnt. Their every action has pointed to this conclusion. It could probably be called treason?
    The Constitution requires the payment of the US debts in the Fourteenth amendment , section four.
    "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.'
    Why haven't the conservatives read the Constitution and this amendment and section? Only congress has the power to vote for spending, and these are the debts they voted for and now they don't want to pay for them.

  190. Acknowledging a debt simply means that you admit it is real and legitimate and that it *should* be paid with the high priority. Thus the 14th amendment simply means that US government debt cannot be disavowed in the way that confederate bonds were declared worthless when the south surrendered. For this reason the 14th amendment is not a guarantee that bond interest actually *will* be paid on time regardless of circumstances. Thus payment may be impossible or delayed if there is no money in the treasury but even so the debt is still owed and still acknowledged. I cannot imagine that the 14th amendment forces the president to make interest payments even when it would cost the lives of our military personnel or cause us to lose a war. I am not sure if the president has the authority to delay debt payments simply because he thinks the available money is needed for ordinary spending. Obviously the amendment implies that bond holders must eventually be paid as long as the government survives and also that bond holders will have a high seniority compared to other claimants on the treasury.

  191. More like sedition.

  192. Dr. Krugman does not effectively address debt issues that concern me.

    Debt increases instability and overall uncertainty, and this lessens the benefits of taking on debt.
    Debt used to fund unproductive policies is decidedly inferior to debt that services productive investment.
    Monetizing the debt has detrimental long term consequences.
    Creating economic conditions that enable the private sector to discharge its debt overhang is the key reason for prolonging our current deficit, and forgetting that objective defeats the purpose.

  193. The problem is not private sector debt. The private sector, like the public sector, can borrow at historically low rates. The problem is that the private sector is not spending or investing because there is insufficient demand.

  194. The thesis has always been that more government spending is good. And it is said to be good especially when economic times are bad. It is said to be good, and is claimed to help alleviate unemployment at times like the present. So today, based on this presumption again, reasons are given why the debt ceiling is wrong. Similarly it would be claimed that a balanced budget amendment would be wrong.
    So now the coining of money in such a new and unusual way would be claimed to help. And you also even say that: "the Fed could and would offset the Treasury’s cash withdrawals by selling other assets or borrowing more from banks, so that in reality the U.S. government as a whole (which includes the Fed) would continue to engage in normal borrowing."

    But the basic presumption is not supposed to be questioned, about how a recession is cured by more spending. And as you said, there still would still be the borrowing by the government. This extra money spent by govt. goes into the economy. But it is actually a fallacious claim to say that the extra money stimulates the economy.

    The reason it is fallacious is because money equal to the extra money spent is then taken out of the economy, or out of China's or some other nation's economy, which invests in U.S. Treasuries, to buy the added U.S. govt. debt.
    And that is money that investors might otherwise be investing in America's economy and in improving the infrastructure or any other good purpose by way of any free market.

  195. The fallacy here is that there is a constrained amount of money available for investing. The problem with this argument is that there are trillion of dollars languishing as deposits that are not being used in the economy. The owners of that capital have made a decision not to put it into circulation. That's one of the reasons that the government is put in the position of having to consider additional spending.

    There is, in fact, a glut of capital available and the money supply is not fixed; therefore, additional borrowing on the government's part is not going to constrain the amount of capital available for economic activity. It's a Republican/Libertarian delusional fantasy.

  196. These old canards have been dealt with at length by Prof. Krugman in many prior columns. No, government borrowing does not crowd out private investment in a liquidity trap, and yes, it has been amply demonstrated that government spending does stimulate the economy in a recession, particularly one associated with a liquidity trap. Government spending is necessary to fill the output gap in this situation. It's called Keynesian economics.

    To cite just a couple of representative examples:

  197. I am wondering why Japan has been unable to spend its way out of its depression. It has been 20 years and the debt is bigger then 200 percent of GDP and yet still growth is negligible. They tried every useless scheme of public works imaginable but still nothing. Maybe the Fukashima disaster will finally kick start them.

  198. You are so right to compare the Republican threat to terrorism, and the appropriate response from Obama should be to not negotiate with terrorists. Instead, the removal of the threat to not raise the debt ceiling should made a precondition for any spending-cut talks to occur. Then let the Republicans stand there with their time bomb and let the world see if they are indeed vindictive enough to create financial calamity out of pure spite with nothing to gain. If they are, yes we will suffer, but at least these suicidal maniacs will clearly be exposed and be purged from the government in the next election, and we can be rid of them. If not, we call their bluff and allow sanity to win. Only this approach puts responsibility and consequences where it belongs.

  199. You are making this to be so much fun by being such sore losers. I am reminded of how Bobby Fisher would react when he would occasionally lose a game. Next you will be sobbing in the bathroom or rolling around eating the carpet and screaming like Shylock for his lost Ducats. These crazy notions about salvation via platinum coins, amusing as they are, simply go to prove that you totally checkmated. But what a bunch of babies. Totally pathetic..

  200. What a great idea!

    However (idealistic fool that I am), it's sad when we have to pull parlor tricks in order to bring sanity and needed process to deal with the debt ceiling confrontation.

    I support having Reagan on the coin, but I think that a picture of the House of Representative chambers might be a more appropriate picture. The Senate is not exactly sensible but the House is so dysfunctional that it makes the Senate look almost sane in comparison.

  201. Personally, I'd vote for putting Groucho Marx's face on the coin. And on the reverse, perhaps the motto "What, Me Worry?"

  202. I assume you will not mind being paid with some of those coins.

    Right now this approach appears to be legal but I suspect that the Supreme Court would find it violates the separation of powers concepts in the US Constitution. The question will be can one branch of government surrender its powers to another branch of government?

    I believe the platinum coin parlor trick will be found to be unconstitutional.

  203. I believe the Republicans will cave, so I doubt we'll get a chance to see how SCOTUS would rule if the coin trick were actually tried. If it were tried, however, I believe the high court would blink before issuing a decision that overruled the President's constitutional duty to pay the nation's bills and protect the full faith and credit of the United States. Thomas, Alito and Scalia might vote to crash the world economy and wreck the country's credit, but Roberts and Kennedy would demure.

  204. I think you might be mistaken. There's no conflict between branches -- Congress already passed the law authorizing the minting of the platinum coins. It's pretty well settled that Congress can delegate responsibilities to the Executive, which ordinarily carries out the laws passed by Congress.

  205. And childish.

  206. The President can simply raise the ante in this poker game.
    Under Title 18, U.S. Criminal Code, undermining government is sedition. The Attorney General can indict the House Republicans who vote against raising the debt limit for extortion, sabotage and sedition.
    That wouldn't be "looking back", but steaming full speed ahead.

  207. I contend that the case you are talking about isn't difficult to make and it should become a new meme that sticks to the republican party. The meme that they are out to undermine the Government. See the following:

    Norquist’s stated goal is to shrink the government to the size where it can be drowned in the bathtub.
    The US government is a living entity.
    To drown a living entity is to kill it.
    To kill a living entity is to destroy it.
    Thus; Norquist's goal is to destroy the living entity which is the US government.
    Norquist is a US citizen.
    Sedition is defined as the willful intent to destroy a nation’s government by one of its citizens.
    Sedition is a crime.
    Thus, Norquist is a criminal seditionist.
    He has engaged others in an attempt to foment sedition.
    Those others have pledged to support Norquist’s attempt to destroy the US government.
    To engage others in a criminal enterprise is known as a conspiracy.
    Thus Norquist is the leader of a criminal conspiracy to destroy the US government.
    Thus, those who have pledged to support Norquist in his conspiracy to destroy the US government are co-conspirators and are equally culpable.

  208. This isn't an area in which I have expertise. I wasn't sure there were any remaining sedition laws on the books. But if there are, I agree that some of the statement and actions by the Republicans qualify, as long as they aren't shielded from prosecution by Congressional immunity. However, some of the raving statements by proponents of unrestricted gun ownership, especially the ones on national TV, would seem to be prosecutable, since they personally threatened to take up arms against the government and called on people listening to them to do the same. As much as I support freedom of speech, we all know that no freedom, including that one, is unlimited. Threatening armed attacks against the government and encouraging other to do the same would seem to cross a line into criminal activity. Perhaps one of the brilliant legal minds here could shed some light on this?

  209. Here is the US Statute as it applies to Seditious conspiracy:

    18 USC § 2384 - Seditious conspiracy:

    If two or more persons in any State or Territory, or in any place subject to the jurisdiction of the United States, conspire to overthrow, put down, or to destroy by force the Government of the United States, or to levy war against them, or to oppose by force the authority thereof, or by force to prevent, hinder, or delay the execution of any law of the United States, or by force to seize, take, or possess any property of the United States contrary to the authority thereof, they shall each be fined under this title or imprisoned not more than twenty years, or both.

  210. The President could sell arms to Syria then use the profits to finance drone strikes in Pakistan. The money saved by not getting used by the CIA could be redirected elsewhere. How could the republicans be against this? It's just a variation on a theme they've already used and Obama can say he doesn't remember anything about it.
    Right now Syria would be willing to pay a lot for arms too.

    Or why not sell a lot of oil out of the Strategic Reserve? It would hit the markets, lower prices all around, and make a tidy sum. The lower gas prices could help consumers while leaving cash for things like groceries, health care, and other bills.

    I say sell things like this that we've already bought and put into the ground. The republicans like to sell our rights and property off at a loss to the public. Sell the Congress building and make them pay rent to some slum lord. The gym could charge a fee and let's make Congressmen pay for their healthcare, many have gotten richer while in office so they can afford to give up tax-payer subsidies. I like the coin idea but why stop there?

  211. My first comment presented the argument that the extra government spending is not really having the good effect is supposedly should be having. Then RDV (Pennsylvania) tries to claim that my argument is fallacious because "there are trillion of dollars languishing as deposits that are not being used in the economy. The owners of that capital have made a decision not to put it into circulation."
    "additional borrowing on the government's part is not going to constrain the amount of capital available for economic activity."
    That is all true, but the fallacy there is that the additional borrowing does not increase the amount of capital available either.

    I never claimed the money being borrowed was constraining the economy.
    I don't agree if that's what the "delusional Republican/Libertarian" people claim.
    I don't have to claim that.
    The point is that it is not helping the economy either.

    In fact, because of the costs of borrowing, still low because interest rates are still low, it is hurting the economy instead. And the idea of its stimulating the economy serves as a cloak to disguise its actual use, which is to prop up the use of money for welfare. And I don't disagree with its use for that.
    But it is not helping to alleviate the problem of welfare needs itself.
    It isn't helping to increase employment.
    The extra money still is being sopped up by the rich interests and used to pay for buying the extra Treasury bills, now to the tune of over $1 Trillion per year.

  212. Most of the commentators here and the the partisan Krugman make virtually no sense at all the way they frame their argument,

    Their argument seems to be that Obama should figure out a creative way around any limitation on spending in excess of our revenue rather than saying Obama should offer a plan that brings some type of fiscal sanity to our budgets.

    To blame our current situation on others does not change our current situation.

    Clearly the way we are spending way over our means is not sustainable. The politicians will not address this fundamental issue.

    Sure we can print money til the cows come home but if that is the strategy our nation chooses, future generations will be the worse for it.

  213. You're missing the point. The issue being discussed isn't whether we should continue spending. The issue is how we pay for spending that has already happened. Since a large part of that spending was paid for with borrowed money we have to be able to continue servicing the debt we've already incurred. If the GOP forces us to default on our debt the economic ripples will be more like a tsunami in the world economy. Instead of being in a tepid economic recovery we could trigger a worldwide Great Depression instead. That's what's at stake here, and that's why the President is looking for means to honor the nation's obligations regardless of the political posturing by a deranged political party! If minting that coin enables us to continue servicing our debt and prevents an international financial catastrophe, the President should do that.

  214. If a bank lends i.e. spends money it takes on debt. This money enters the economy, one would hope for purposes that effect the common good. So debt for one party is assets for the other.

    The government spends money in a similar fashion or at least one would hope it does. In a well regulated economy the treasury issues debt i.e. government spending for projects and programs that the Congress deems necessary and lawful. Thus debt is issued for what is deemed to be the common good.

    Tax cuts per se keep money circulating in the economy. That's a good thing, but there's a limit. If the Congress appropriates spending for non essential programs, or ones you don't agree with, then the debt incurred for such programs will be considered wasted and if excessive more revenue will need to be generated or the programs cut or eliminated.

    This is where the rubber meets the road. Conservatives don't like social programs. They think they are wasteful and undeserved. Liberals don't like invading countries for oil. They think they are wasteful and immoral, and most recently illegal since Congress has not isuued a declaration of war in decades.

    So take your side. Pick your spending program(s). But don't confuse good/bad policy decisions with the obligation to pay for things already bought and not paid for.

  215. Rob,

    The issue absolutely is whether we should continue spending, or not. Obama would like the debt ceiling permanently lifted, meaning that that artificial constraint will never impact his or other administrations' ability to spend recklessly.

    The point is that our wildly out of balance budgets are causing us to incur unacceptable debt loads. Without changing what we plan to spend, our budget, we will continue to incur these massive debts. So the argument that the debt has already been incurred is a canard.

    I am very open to many ideas about bringing sanity to our budget: drastically cut the military, raise taxes, means test entitlement programs, raise the amount of salary subject to Social Security taxes, stop doing things that are not working, i.e. the war on drugs, etc. There are so many things that could be done.

    Yet politicians on both sides of the aisle essentially refuse to offer any reasonable solution and would prefer the status quo because they don't want to offend any possible constituency. Has Obama ever offered any serious plan to reduce the military for example? Of course not.

    Eliminating the debt ceiling is just one more way to allow our politicians to act recklessly without any constraint.

  216. This kind of thinking is not at all constructive; in fact, it is the moral equivalency of using the debt ceiling to force concessions on spending, that which Krugman protests. While fellow travelers like Obama and Krugman deny it, the federal government has a long term spending problem that needs to be solved sooner or later. In my experience, problems are easier to solve earlier than later. The "one time" stimulus, which was diverted from "shovel ready" infrastructure building jobs to a massive expansion of the social welfare state, is now part of the baseline budget. Why is that? Because the Democrat President and Senate have violated the law by not submitting budgets for the past several years. The House Republicans are trying to address this problem, and, yes, it requires lower spending on entitlements and other account recents of the social welfare state, since this constitutes the lion's share of the federal budget. (Defense needs to be cut as well, but its total budget - $686 billion - is less than the nearly $1 trillion stimulus).

    The $1 trillion coin is a cynical ploy worthy of P.T. Barnum.

  217. No, Congress would not have a problem if they raised taxes. Which they should. Also, as Mr. Krugman said, lets get more people back to work and generate more money that way.
    Republican policy is to starve the beast. The problem is that it is not a beast. Its our government, our people. And the problems we have today are the result of policies of the same people who want tax and spending cuts.
    No, we need to stop Republican destruction of our country.

  218. Not sure which Constitution you're reading, but in the one this nation has been following for the past 200 years or so, it's Congress that writes the budget. The President and Senate only do so as part of the bargaining process in passing it. And by the way, the dept ceiling is all about paying bills already incured, not about curtailing future spending, and defaulting on it is not an option, unless we decide to declare bankruptcy.

  219. The Government has a revenue problem. The country has plenty of money. Congress just refuses to ask the population to pay for everything it does.

    In one year, how much do Americans spend on foreign-made high-tech mobile devices and flat screen TVs, vacation trips abroad, foreign-made cars, imported wine, and imported clothing?

    Yet Americans couldn't afford to have their taxes raised? At all?


    We make choices. The GOP has successfully led the argument, since President Reagan, that the Government is bad and we shouldn't give it our hard-earned money.

    Now it's time to pay the piper-- the big, bad Government that pays for air traffic safety and food safety and interstate highways and foreign drones and medical aid for the poor and elderly.

    We have the money.

  220. The House GOP Majority has made "cut spending" their number one legislative priority, but they refuse to identify the specific cuts that should be made, just as Governor Romney refused to identify which cuts that he would make.

    It is time for the GOP to identify the cuts that they want to make, put them into a bill, and force a vote in the House. Let us get everyone on the record with a recorded vote on the GOP's spending cuts.

    Then, we voters can decide which Members should be returned to private life in 2014.

  221. Agreed, I am not adverse to any decision that is made by our elected officials as long as it is transparent and legal. It is never transparent, there is way too much horse trading and subterfuge. Like you said, declare what you want cut, even if it is stupid. Then write it up and put it to a vote. Let's see who will really put up a bill to cut social security, medicare or the god of the republican party: defense.

  222. Doesn't Paul Ryan's earlier budget proposal make the tone of the cuts clear, Pat?
    Cut social security, cut SNAP, cut Medicaid and other things that go to people who are not already financially secure. Then this will build their character as they are forced to take low-paying non-union jobs and they will become taxpayers and feel good about themselves.
    Ahh, now I see why these budget cuts are not spouted by the GOP except in enclave meetings....

  223. This column fails to mention that if the Congress fails to raise the debt ceiling, they are in violation of their oath of office which has in it among other things to uphold the constitution. Since the constitution states that the country will honor it's debts and since congress failed to do this if they don't vote to raise the debt ceiling, shouldn't congress be impeached? All these Republicans who use the excuse of upholding the constitution to justify their position on no new taxes, etc. can be out looking for new jobs and the rest of the country will finally be rid of these economic terrorists.

  224. Nice point.

  225. "What do we want? Coins. When do we want them? Now."

    Krugman, never gamble using Co_ins. It will fail. This Co_in knows.

    Half the fun is getting there. This president will not concede his one great joy in life: Negotiating- where all parties, Democrat, Republican, Independent, can walk away with a bipartisan agreement- The Republicans got it all.

  226. Dealing with insanity breeds more insanity. The "crazies" in this case, the republican "t" party folks, are making the sane do silly things.
    Somehow the press has let the crazies focus on the debt they created by 2 wars and a market collapse, as if they are now the saviors of the economy.
    It's time to consider sane policies. Let us continue the withdrawal from war, the continuation of policies that stimulate the economy, a sane immigration policy that enables migrant workers to work and pay taxes, continuation of our growth of the energy section, implementation of the affordable health care bill that will slow health care cost growth, and of course cuts to the bloated defense budget. In addition, we need to continue to change our tax laws to bring in more revenue that would be dedicated to debt reduction. And yes, we do need to cut the growing cost of medicare as Mr. Obama had proposed to Mr. Boehner before Mr. Boehner lost his MOJO.

  227. Part of the problem is the lack of understanding by the general public. The GOP is teaching their rank and file that raising the debt ceiling is giving Obama more money for wild, irresponsible spending. They have also taught that we have this debt because of spending carried out by Obama, i.e., they give a terrible, false civics lesson in which it is taught that the President can somehow spend money all by himself ignoring the little fact that the Congress holds the purse strings.

    With these false lessons, they look like gallant heroes to their base bravely "holding the line" against our "irresponsible, spendthrift" President. It is no tribute to our education system that so many voters do not understand Civics 101.

  228. Is Civics even taught in high schools anymore? I am 61 and I loved American History and Civics. I loved learning about our democracy and couldn't wait to vote and have voted in every election since, including all local ones. I remember staying up all night in 4th grade to watch President Kennedy be elected and I was so excited. I watched all the conventions. I have served as a Town Councilor and been on town committees. I am concerned that I might be a dying breed!

    Do the schools teach Civics anymore? If not, where will these kids learn how to be responsible voters? From Fox, ie Rupert Murdoch and Roger Ailes? If so, that is frightening for America's future.

  229. Very right. The energy here expressed would do good educating the masses as to reality.

  230. Congress has to approve all spending and all taxation. In this regard there is nothing Obama or any other president can do on their own.

    As Krugman points out, Congress can solve the deficit problem by increasing revenue or decreasing expenditures. They haven't and won't because there would be a political price to pay regardless of what they do.

  231. There would be nothing undignified at all about using the coin trick. Consider a little history in dignity as taught by Calvin Coolidge, who said there was "no dignity more impressive, nor any independence more important, than living within your means." If Republicans ever were truly conservative in setting fiscal policy, they've abandoned all tradition and spent with reckless abandon since Ronald Reagan first began setting new records in deficit spending. And when it comes to living beyond ones means, no president has been more shameless than George W. Bush, who cut taxes on the rich even as he started two unnecessary and unfunded wars. Considering that the fiscal crisis broke in the eighth year of Bush's presidency, and that Republicans have done nearly everything in their power to obstruct a strong recovery, it seems that anything Democrats did to prevent them from doing even more harm would be far greater than dignified, it would be noble.

  232. Wonderful post, Mr. Henscheid. Thank you.

  233. Nicely said. That's it in a nutshell.

  234. Again and again Mr. Krugman has laid out the arguments for fiscal sanity. Most of the commentators here find his arguments persuasive, as do I. Yet consistently, with every column pleading for reasonableness to prevail, there are numerous right-wingers (who, for whatever reason read this decidedly Progressive paper, instead of the Wall St. Journal, which would be more in synch with their political and economic perspectives) coming out sounding the clarion call for economic austerity. This is what I find so amazing. After all the economic arguments have been trotted out again and again showing the folly of austerity in times of economic hardship, they cling to the notion that austerity is the solution. And they insist, with great indignation, that they are right and the economic experts are wrong! I suppose that when a great party dies, it dies with a scream rather than a whimper.

  235. Yes, and it's funny that austerity in the military is somehow going to lead to job loss and reduces GDP, according to these very same people. Government stimulus (which is what the military, in part, is) only seems to work if you like the institution it funds. Moreover, austerity punishes those least able to weather a reduction in assistance- but of course, those folks are all the "takers" and should be punished for their laziness, no?

  236. Your comments are atypical of the left wing re-distribution mind set, if an economist agree with my ideology than they are economic experts. The other economist, 2/3 of all registered economist recommend spending cuts with tax revenue increases, don't exist because they are not advocating higher spending and higher taxation. Krugman is left wing partisan, he has never advocated reductions in spending during prosperous times and only says during recessions we should spend more now and cut later. I suppose when a great country is overtaken by large populations with their hands out or in someone else pocket it dies with a whimper but the constituents who have the pay for your progressive ideals do scream.

  237. "again and again showing the folly of austerity in times of economic hardship"

    Tell that to the Japanese...

  238. The Treasury is in the middle of issuing a series of platinum coins celebrating the six principles of democracy given in the Preamble to the Constitution. The theme for 2013 is "To Promote the General Welfare." Seems appropriate for the trillion dollar coin.

    Let's print one of these, changing the denomination from $100 to 1 trillion dollars. If we use scientific notation, we wouldn't even need to change the design.

  239. This news truly restores my faith in govt. Somewhere in The Treasury, some
    brilliant, forward thinking, worker has already begun the process of producing the coin which will finally and indefinitely haul us back from the precipice.
    Hurrah for all the govt. drones! Every drudgering dog has it's day!

  240. For those seeking to build wealth by investing, factors such as recessions and inflation have traditionally been the major obstacles. Now there is a new wealth destruction factor-the nihilism of the Republican Party.

  241. Why is the coin sillier than an English coronation ceremony or the pope's hat? The same commentators who mock the coin take those ever so seriously. Or any number of things that we say and do and see every day? It really comes down to what we are used to seeing. The coin is legal and it accomplishes what we need, that is, end the much sillier and much more destructive debt ceiling hostage taking. Mint the darn coin.

  242. The ends don't usually justify the means. In some contexts they do, like the Pope's hat as a transducer of divine inspiration. The coinage solution as a counter weight to the silly debt ceiling maneuver like objects of ritual in religious ceremonies serves to focus folks attention. The coin as it focuses attention on the craziness of the Congress not doing its job is good.

  243. Excellent comment, though I would change "sillier" to "any less wise." Yes, mint the coin. And while you're at it, why not bring back the British crown? Was King George really any worse than the Republican George dynasty?

  244. Just for the fun of it, I'd like to see that 1 trillion dollar coin being minted. But I'm curious about the size of that coin for next year: 2 trillion ?

    Yeah, bring'it on !

  245. The Republicans are right about one thing. Government is spending too much in certain areas - like the military.

    We need a return to pre-9/11 levels of military expenditures - and a redirection of those funds to uses that will generate additional long-term employment / revenue in America (AND ONLY IN AMERICA), like construction of high-speed rail lines, complete renovation of the power grid, repair of our crumbling bridges, roads and infrastructure, etc.

    We should also scrap the current Medicare D prescription drug benefit, and replace it's mechanisms with a system where Government is able to aggressively negotiate with pharmaceutical companies, and where importation from Canada is encouraged.

    The vast majority of the debt this nation owes, and that House Republicans are now refusing to fund, was accumulated under Republicans presidents / Republican-controlled Congresses - or in response to disasters their irresponsible fiscal policies set in motion.

    Voodoo economics only leads to budget deficits. If Grover Norquist and his lemmings are truly serious about drowning "the beast", then they must begin by drowning themselves in the bathtub.

  246. Krugman's constant cheerleading for this Administration has turned him into a political "expert" while blinding him to basic economics.

    The debt "ceiling" and the "trillion dollar coin" are both political means to an end. It is perfectly legitimate for both to be used as negotiating points in these budget negotiations. But for Krugman to belittle the Republicans stance in these negotiations is more partisan parsing. Where is the acknowledgment by the Democrats that they've written a blank check for medicare and social security that is now coming due? Yes, taxes and spending cuts are the corrective. We've already addressed the first with this massive tax hike, now its time to address the cuts.

    As to economic, we are in a low inflationary environment that allows the government to borrow at minimal cost and fund all of Obama's grand programs and unconstrained spending. Yet, a fiat money that becomes unsustainable means that someday the bill will come due, most likely in a vastly devalued dollar. I guess America being reduced to penury and having to pay dearly for the large our imports will be the best road to recovery. America consigned to a developing nation status seems to be alright in Krugman's world, but its not in most other Americans' expectations.

  247. Exactly what are "Obama's grand programs and unconstrained spending" that you are referring to? They only exist in the imaginations of the right. The major contributing factors to the federal deficit are the two unfunded wars and irresponsible tax cuts, as well as the lingering effects of the Great Recession.

    As for social security and medicare, they are funded separately and don't contribute a dime to the deficit. Social security, in fact, has a massive surplus right now.

    And for the millionth time, Dr. Krugman is NOT saying that long-term debt should be ignored -- but rather that slashing spending right now would hurt the economy, slow the recovery and plunge us into another recession.

  248. Inflationary environment? Care to back that up with some facts? That argument has been floating around for several years now but no, no inflation that we,ve experienced. There was no tax increase either but I will grant you that some of the Bush tax cuts were allowed to expire as they were meant to do. You either do not understand the premise that with regard to discussions of objective reality theory must be supported by facts or you despise the facts because they stand in the way of your hidden agenda. Either way you are either unwittingly parrotting propoganda or intentionally distorting the argument. Facts please.

  249. Exactly right. It is the spending that has been locked in for decades and which grows at a fixed rate, the congress has been trying to get a handle on. They've already dealt with discretionary spending.
    To say the suggest the spending is legally authorized by congress already is a bit disingenuous.

  250. Ceilings; debt; taxes; an intransigent, inept congress; an indecisive, negotiable president - seems to me we've been talking about these things in one form or another since the Decession began. Meanwhile, on January 1 payroll taxes reverted to their previous level, reducing paychecks by 2 percent. Not that people (working people, that is) were exactly flush before. When I visit my local grocery, sale items have typically been wiped from shelves as if by locusts. Here at ground level, away from the heady atmosphere of DC and Wall Street, we keep waiting for the world to change. Looks like we're in for a long wait yet. The only question is what comes next.

  251. This debt debate demonstrates the dysfunction of the US government. The proper way to govern is for the House to prepare a budget, then the Senate approve or amend it and to pass it, then the President should sign it. By law, this should be done in each and every year. No budget has been signed by this President for the last three years. The House has passed a budget every year, but the Senate refused to amend or approve it and the President has not signed any budget for three years. In effect, the government has been operating illegally for the last three years. This government has been operating with a $trillion deficit every year.

    From what I can see, the House is using this deficit ceiling law to force the Senate to pass a budget before they will approve any borrowing. It really is a debate on the budget and not the debt ceiling. If a new budget is approved and signed, and if more money need to be borrowed, then the debt ceiling will be automatically raised.

    Spend time on a budget debate instead of wasting time on nonsense idea as Prof Krugman suggested. The world is watching America to see weather it is serious in governing instead of playing politics.

  252. "This debt debate demonstrates the dysfunction of the US government."

    No. It demonstrates that the elected officials have zero knowledge of how federal accounting works.

  253. "No. It demonstrates that the elected officials have zero knowledge of how federal accounting works."

    Isn't having elected officials with zero knowledge of how federal accounting works in charge of federal accounting the definition of broken?

  254. UUUHH, Hey "man".... Unless the rules are changed, a "budget" could not even be voted in the Senate because of the multiple GOP filibusters in the last two sessions of Congress and their :leaders constant threat not only intensify its use but to employ it to prevent any reasonable modification of the rules to make it accord with democratic principles. The obfuscation of sound public policy would merely shift in your analysis from the House under GOP majority control of the agenda (where fiscal policy should constitutionally be debated) to the Senate where arcane "rules" give the minority GOP ability to prevent any debate. This reality decries your inference that the Dems are complicit by playing politics, a term which this generation has made pejorative in contrast to its classical definition (the process of law making in a republic.)

  255. Entertaining and enjoyable as the passion that goes into this discussion is and the fact that the values reveal a lot of core meaning for people over another made up issue, it is really not productive. Similar to the fictional nature of the debt ceiling the coin minting answer to it merely stirs the pot of public sentiment and detracts attention from the real pressing needs of our nation. The energy would do so much more if directed at real policies in dire need like raising teacher pay.

  256. One little complaint here. Raising teachers' pay is not the answer, BUT
    hiring more teachers IS.


  257. On the premise that congressmen and governors are elected to do the will of their constituents -

    Why doesn't the government simply refuse to spend federal moneys in those districts and states that object to government spending?

    That would be a "balanced" approach to deficit reduction.

    And the President could remind his opponents that they should be careful what they wish for.

  258. That idea has merit, so long as the federal taxation in those districts is proportionately curtailed. Sign me up.

  259. "...... if the debt ceiling isn’t raised, the president will be forced to break the law, one way or another; either he borrows funds in defiance of Congress, or he fails to spend money Congress has told him to spend. "
    -Paul Krugman -

    What part of the foregoing statement did you - and the 30+ readers who have so far agreed with you - not understand?

    I think you owe it to your fellow readers to actually READ the columns you choose to comment on. Why The Times would choose to print such obviously uninformed drivel is even more beyond my comprehension than the fact that so many others are willing to agree with comments they have either not read or understood or both.

  260. What if you have the misfortune to live in one of "those districts and states"? Apparently, Peaches, you don't. Your solution is just another in a growing list of suggestions based on the premise of "I got mine [in this case, responsible representation]; you get yours." As you state, "congressmen and governors are elected to do the will of their constituents." Sure, that is the theory at least.

    Not very compassionate, Peaches.

  261. President Obama helps to keep the Republican arguments (read lies) about the debt ceiling alive by not explaining to the country simply, directly, and frequently what he can and can not do with respect to spending. This reprises the mistake he made in the Obama care debate by just saying, "It's a good thing" without any further details that put the lie to the outrageous claims by the right.

    The President should point out that Congress sets spending levels and establishes tax rates. And the President must spend what Congress appropriates; he may not impound appropriated funds. So, unless the Congress appropriates an amount equal or less than what will be raised by the taxes they have established, there will be an annual deficit. The President can't do anything about it. Under these circumstances, all that constraining the debt ceiling will do is determine at what point during the year the US will have to start borrowing.

    Deficits can be controlled only through the budgeting process, i.e. through setting appropriations and tax rates. These are in the first instance Congressional responsibilities. They are very challenging responsibilities and Congress ain't meeting the challenge.

    Much as he seems to hate explaining himself, the President must get out front and explain the facts and directly refute the nonsense being promulgated by the right. And he should lead by repeating that he will not negotiate the debt ceiling. He will debate appropriations and taxes.

  262. Could not agree more. Perhaps he can get Bill Clinton to give him lessons in the art of explaining things.

  263. Who would the public rather believe? Boehner, O'Connell, Rush and Hannity or black President? Nuff said.

  264. We have a crisis of communication. The President needs to take his case to the public and clearly explain his plans to get the economy moving again and to maintain control of our debt relative to G.D.P. Results show this has not been done.

    He needs to address the issue just as aggressively as was done to get reelected. He should consider bringing in his election campaign team to address the issue since they are the reason he managed to retain the office.

    This campaign is not about a speech or two in the Oval office and across the country. It should be looked at as a total effort to educate both the public and the other folks in Washington. If the Republicans cannot be convinced directly, they will come around as the public begins to strongly support what the President is proposing.

    Mr. President, lead!

  265. You are entirely correct in your assessment that the President must educate and lead. He must explain to the people what he intends to do and why he intends to do it - repeatedly; we are a nation of slow learners. I cannot believe that once they fully understand the recklessness of the Republican congress, the vast majority of the American people won't support the President's actions.

  266. You are assuming that the public wants to be educated! I don't think so. The crazies are winning the battles in state after state, in congressional district after congressional district. We want things but we don't want to pay for them nor do we believe that we have to pay for them. The federal government provides one-third of the budgets of the states we are told. Why don't these states pay their own way? Why do the state legislatures not provide the tax base for the state. Because we have a generous uncle that's why! We don't need no edukation!

  267. I thought it was my vote that enabled the President to gain a 2nd term...

  268. These Republican congressional tantrums have to end - mint the platinum coin, issue coupons, or end the filibuster - bottom line, there should be no further negotiations with the Repubs over what ought to be business as usual.

  269. Absolutely, we should be spending ourselves, our children and their progeny for generations to come into national bankruptcy and indentured servitude to support a bloated federal government that is spending like a drunken sailor on shore leave. Excellent plan.

  270. It's a sad commentary on the state of our union that we have to present a picture to the rest of the world showing our leaders, and, by extension, ourselves, to be, in essence, economically illiterate.

  271. President Obama got the tax increase he wanted and, of course, is now asking for more because no matter how much is taken it's never enough.

    Needless to say, hardly a word from him about reducing spending in any area other than Defense. I have to conclude, then, that every penny, say, the Commerce or Labor Depts spends is crucial to the viability of the nation.

    In the face of massive deficits and overspending, prominent economists and Democrat politicians are seriously talking about issuing a $1 trillion coin. Unreal.

    Let's just declare ourselves a banana republic and be done with it, shall we?

  272. The only thing making us a Banana Republic is the t-party faction of the Republic Party

  273. Do you believe defense spending should not be decreased? Please explain.

  274. The only thing that is being "asked for" is the ability to meet obligations congress has already made. The president cannot be held accountable for the failure to fund these committments. To say President Obama is asking for more is untrue and misses the point. The President is simply paying the bills rung up by congress. If congress thinks the bills are too high, it should stop incurring them.

  275. Ah, the Constitution! Malleable when it suits; inviolate when it doesn't!

    We have had several constitutional crises in this country, the largest and most significant in 1860. That one had a lot to do with sectionalism. Funny how things seem eerily similar.

  276. Those who read Krugman can pat themselves on the back for seeking the information he offers. Those who watch only the evening news on the major networks are left, night after night, thinking that raising the debt ceiling creates new debt rather than paying for debt already incurred by congressional passage of bills.
    That minute or two wasted by Brian Williams et al on the 'feel good' story of the evening could be spent regularly on a 'feel smart' story-- educating the American public. It's only complicated because so few bother to explain it.
    Thanks, Doc.

  277. and those who simply read Krugman...are missing the boat as well. There would be no reason to raise the debt ceiling unless the government needed to incur more debt. Of course, some of the current year deficit (which adds to the debt) maybe used to pay off interest on the existing debt. Of course, we could reduce spending on other things so minimize that borrowing...and debt increase. However, what happens when interest rates return to their normal levels and all the revenue taken in by the government (taxes) is required to pay off the interest on the existing debt?

    Raising the debt ceiling my be necessary, but getting a budget (haven't had one in 4 years) might be a good idea as well.

  278. Sbrownstein-raising the debt ceiling is to pay bills that Congress has already incurred. It has nothing to do with new debt. Since they already authorized the debt, they ought to authorize the payments. A household example: When your credit card bill comes, you pay it. You don't call the company and say, "I'm sorry. The bank decided not to release the money from my account, so I can't pay this bill." Raising the debt ceiling is the equivalent of the bank releasing the funds.

  279. The House of Representatives has become outmoded. The concept of representation for the people is just not necessary in our modern society plus our system of democracy works so slowly. We have to past bills quickly now so we can see what's in them. All we really need is an executive branch who can run the printing press and the Senators who can nod in agreement.

  280. We're doing just great with a Senate controlled by reactionaries who have abused the filibuster. We have a gerrymandered House dominated by far right ideologues. Nothing to see here, move on.

  281. We need to change the way voting districts are drawn. Some countries, like Canada, have separate commissions that draw electoral districts. These commissioners are outside the party sistem, similar to the Congressional Budget Office, and are far more impartial than the parties who always choose to gerrymander outrageously, especially in the south where there are large blocks of African-American voters. That would go quite a way toward solving many of our problems. But it won't happen.

  282. Agreed with Trevor, congressional districts should be drawn by separate commissions. Of course these commissions would come under political pressure. But any new separation in the decision making away from the players who are immediately affected by it would be an improvement.

  283. I wasi not sure if I should laugh or cry at Professor Krugman's editorial. I agree with his overarching premise in that the nation has plenty of wealth to take care of its financial obligations but Republicans are loathe to tax at a level to balance spending against income. Now that a debt of some $15 trillion has accrued, the only option Republicans can see is to cut entitllements. But the nation spoke during the last election. Raise taxes on those who have developed the increasedability to pay and develop policies that would allow the seemingly endless war to end..

    Regarding the trillion dollar coin, what happened to the notion that one cannot do by indirection what is not allowed to be done directly?

  284. Default? If we keep printing money at the current and projected rates, a Weimarian inflation will render the dollar pathetically worthless. Isn't that a default as well? The solution is simple, raise the entitlement age for retirement benefits. Is that cruel and heartless? Well I guess that FDR and LBJ were just cruel hearted b*st*rds, because Social Security and Medicare were originally intended to provide support for only the few last years of a person's life and the decades that have become the new norm. We never promised to take care of people for a huge chunk of theoir lives. We have already raised these entitlement ages in the past. This action is desperately needed. We can protect the most vulnerable by applying this only to those under 60 and by means testing both programs. This is rational... so why don't we do it?

  285. Health insurance companies do not want the age for Medicare eligibility raised as it would adversely affect their bottom line. We actually would be better off with Medicare for all. This is why don't we do it?

  286. Mr. Peters, you hypothesize that when the government runs a deficit it causes inflation. It seems like you're also asserting that the level of inflation is related to the size of the deficit.

    The truth of these assertions is measurable, and the past few years of deficit spending have offered a real-world experiment to measure it. And, the inflation has not appeared.

    You're right that our culture and government haven't addressed what to do about expanding human life span.

  287. Social Security? Really? It's not an entitlement. It's paid for by my taxes, and I have had no choice. If Congress had not stolen the overage every year to make it look as though they had balanced a budget (both Dems and Repubs) we would probably have a balance in the trillions in Social Security. You're not touching that, and anyone who wants to won't get elected dog-catcher.

  288. PK should try reading the Constitution. Fiscal decisions do not rest with Congress. They are initiated by Congress but must be signed by the President. The Republicans in the House would like to cut spending and passed a budget that would do so but neither the President nor the Senate will sign on. If the President and the Senate are frustrated by the House's refusal to roll over and raise the debt ceiling, well, democracy means you can't always get what you want. As for the never-ending hostage-taking and terrorist analogies, why is it always that Republican refusal to rubber stamp Obama's wishes is "threatening to set off a bomb" but Democratic refusal to accede to the Republicans wishes isn't?

  289. In the 1990s, the Clinton administration ran surpluses that began to pay down the debt run up by 12 years of Republican rule. Then the Republicans took over, exploded the debt, and blocked investments that would stimulate the economy thus raising revenues. It was a Republican Congress and a Republican President who, over Democratic objections ("debt doesn't matter"-D. Cheney) sent the economy into a tailspin and exploded our debt.
    The sanctimoniousness of the Republican debt-ceiling crew is nauseating.

  290. It's hostage-taking because the leverage that the Republicans are using (raising the debt ceiling) is not connected to their demands in any manner. The debt ceiling artificially limits the amount of money that the US can borrow in order to pay for services already rendered (such as federal payroll) or appropriated (such as federal services). In contrast, the current fiscal negotiations are about future spending. Refusing to raise the debt ceiling accomplishes nothing but financial distress. If the debt ceiling is not raised, it doesn't mean that spending stops. It doesn't mean that the deficit is reduced. It doesn't even mean that spending is reduced. All it means is that we can't borrow the money to make payment on promises already made.

    Republicans have falsely pretended that raising the debt ceiling is some kind of concession to Democrats. It's not. The question is not whether the debt ceiling will be raised (it has to be if we want to continue to fund the federal government in any manner), but when the debt ceiling is raised. Before or after we default on the loans we've already taken Republicans know that it must be raised, but they are willing to hold that absolutely necessary action hostage in order to gain concessions from Democrats on spending.

    Democrats are not using policy positions intentionally designed to harm the nation as bargaining chips. That is called hostage taking. That is what the Republicans are doing and that is why it is different.

  291. The money is not being borrowed for new spending, like a home equity loan. It's to pay what has already been spent. Thant includes the payments on trillions borrowed by Bush and his party for two wars that didn't even show in a budget. Yes, we can blame the Republicans. Reagan, Bush 1 and Bush 2 raised the debt astronomically. Clintron had brought it back to where there could be a surplus. Under Obama, we're still raising the debt ceiling to facilitate two wars fought off the books against which wars he voted. Who's to blame? Just look at the facts. The only reason the Repubs harp on Medicare is that they don't like it. They don't hesitate to borrow to fund a military that, for some reason, costs twice what it did during the Cold War.

  292. Mr. Peters,
    Raising the eligibility age would mostly affect those who can least afford it, which is to say, people in lower wage and/or physically demanding and debilitating work for whom two extra years of work would be onerous. If your concern is truly fiscal prudence, then the simple fix is a lifting of the cap on the tax that funds Social Security. this step would make Social Security completely solvent and allow the funding burden to be borne in a more equitable way.

  293. I agree that lifting the cap should be the first step, before considering raising the eligibility age or cutting the miniscule cost of living raise. Since the people who earn more than the cap also collect benefits, I think it's fair that they pay on 100% of their income, same as the less well-paid folks do.

    Raising the eligibility age would not accomplish much unless you also took out the early retirement option, forcing people to wait until the higher age to start collecting their benefits. The problem with that is that it assumes people have a choice about working. Yet the people who have been unemployed the longest are those over 50, because of ageism. They're capable of work, have skills, and want to work, but can't get hired because of biases about the abilities of older workers. Also, older workers are perceived as needing more health care and requiring higher salaries, thus they're often considered more expensive than younger workers, so even if their ability isn't in question, a younger, cheaper employee is more desirable.

    And the cost of living is so small that my husband's COL was wiped out by the small premium for Medicare Part D insurance. So cutting that won't raise enough money to make much of a difference. All it will do is hurt many people who are already struggling to keep up with the actual COL increases, as opposed to the statistical COL, which seems to have nothing to do with what we actually pay for basic expenses.

  294. Of course, eliminate the cap on Social Security withholding! This is a complete no-brainer, which is probably why Congress never even considers it. And - wouldn't it be more cost effective for the Medicare age to be lowered, rather than raised? That way the pool would include younger, quite possibly healthier, people.

  295. "...the Fed could and would offset the Treasury’s cash withdrawals by selling other assets..." So Bernanke would instantly reverse the QE programs by starting to sell $1T or more of bonds? And this would have no effect on markets? Maybe Krugman should ask Bernanke and the other Fed directors whether they would really do this. But even if it happens in this case, there could be other situations in the future where things do not happen exactly according to Krugman's plan, once the precedent of paying bills with magic coins is established. Perhaps this and other drastic measures should be kept in mind - such as just defying the ceiling and letting Congress take the matter to the Supreme Court - but neither Krugman nor anyone else really knows what would happen. He is proposing a leap into the dark in a monetary direction to avoid the leap into the dark of a possible temporary default. However Obama might attempt to thwart the House, it would be resisted, probably by impeachment.

  296. You might re-read the article. The government would not "pay off the debt" with the coin.

  297. The House wouldn't have the votes required for impeachment.

  298. The most important thing we take from all this is that the Republicans borrowed a ton of money, and now want to vote against paying it. Simple as that. Fiscal restraint starts with looking at what you make, then looking at what you need to spend to live. It doesn't mean tear up the bills and refuse to pay them. The raising of the debt ceiling was decided when they spent the money!

  299. Republicans are essentially refusing to pay down the 10 trillion dollars plus that the Repubs (under Bush) spent off budget for 2 wars, a drug plan to reward Big Pharmacy, payoffs to Wall Street and trillions in tax relief for billionaires. Now they are threatening to undermine not only the U.S. economy, but the world economy. These treasonous buffoons must be reigned in.

  300. My suggestion for who should go on it is the president most singularly responsible for racking up the national debt that his party is now trying to wring out of the working classes that they have put into crisis and have so centralized and unfettered capital in the hands of a few who then created an international financial crisis. I nominate George W. Bush. With Clown hat and ruffle collar, of course.

  301. Paul Krugman is the only rational adult in the room. I agree. Either mint a trillion-dollar coin or issue script (IOUs) like California did. And move forward. Congress has abandoned its Constitutional responsibility. It set a tax rate that is not sufficient to pay for the goods, services, programs and institutions that it has already created and bought. If America fails to pay its bills by either raising more taxes, or tightening its belt and cutting spending (e.g. the bloated military), then Wall Street would be right in lowering America's credit rating to JUNK status. And that, friends, will bring down America faster than any terrorist, or foreign enemy. We are our own worst enemy.

  302. A couple of additional things readers should know.

    The debt ceiling was introduced during World War I and was meant to give the Treasury greater flexibility by not having to have Congress approve every new issuance of debt every time the government needed to borrow to pay for things Congress had already voted for.

    In addition, the debt ceiling has been raised, with little fanfare, dozens of times, including 18 times under Reagand and seven times under Bush II.

    This hostage taking over the debt ceiling is a uniquely Republican concoction intended, as Professor Krugman suggests, to secure through illegitimate means what they have failed to secure through constitutional means. And this is why Congress's approval rating is in the single digits, behind lice, and why so many have lost faith in our representatives, especially the petulant ones, who voted in favor of the vast majority of the spending, and now refuse to pay the bills. Rich.

  303. Colonoscopies are also more popular than Congress. Not surprising though, as colonoscopies actually serve a function and provide a benefit to people.

  304. "Behind lice" is very good. Bravo.

  305. We will not be free of our current difficulties until enough Americans wake up and vote the Republicans out of office. They serve no other purpose than to sabotage anything Obama attempts to do. Whether it is a subconscious reaction of racial discrimination or simply the cultural changes that have eroded the automatic dominance of the white male is hard to say but clearly these individuals are preventing the country from solving its problems and moving into the 21st century.

  306. We did vote them out of office--- except for the gerrymandering performed by the 2010 Congress, that fluke election when anger gave the right wing a momentary victory that they then went on to cast in concrete for the next ten years.

  307. So you are saying that only democrats should be elected to office? I just want to be clear about this

  308. I agree. But how are WE going to vote the GOP out of office when almost 48% (?)of America's voters voted for Romney and Ryan.

    There are just too many Americans who believe that the Democrats do nothing but waste their taxpayer money on the "lazy" moochers who live in the ghettos of all the big cities and mostly the rural south. This belief/prejudice is so strong that the GOP will always dominate these "red" states.

    These "moochers" want decent jobs but our Congress has shipped these good paying blue and now white collar jobs to other countries and replaced them with poverty and drugs. The news media hardly ever discusses the impact on our society over the last 30 years from this job drain. We have been conned by the US Chamber of Commerce, Bill Clinton and other glib TV personalities into believing that this is inevitable and irreversible because of "Globalization", the biggest con of all.

    "Globalization" is a euphemism/smoke screen perpetrated by Wall Street to justify using the cheapest labor possible wherever possible to enrich the Corporate coffers of America at the expense of American citizens, the 99%.

    The GOP minions for some reason are totally blind to the fact that their party is and has been stealing their livelihoods and and chance for a decent life for the past 30 years. The Democrats have been their willing accomplices.

  309. Without humane government programs like social security, Medicare, Obamacare, Planned Parenthood, the consequence of providing health care, preventative care, money to live on (and not behind dumpsters but in homes), the costs of these would fall on the children of the elderly and the ill and the otherwise impoverished.

    The GOP has proposed getting rid of these programs. The election said No to the GOP. Yet they act as if the election meant nothing. They continue to obstruct everything our elected President proposes, and they want to go to the mattresses over the debt ceiling. The GOP is digging its own grave, and I say, lets hope they succeed in doing so. I am sick and tired of their evil recalcitrance.

    When children reach the age of two, it's the "terrible twos". The GOP congress, up for re-election every two years, needs a spanking, and it looks like 2014 can't come soon enough. We should throw those bums out. They will live happily ever after on the bribes they took from big pharma and big business. They're set for life. We should deny them lifelong free medical care. They are trying to deny it to us. They get a life long pension after they leave. Soldiers returning home without all their limbs do not get lifelong healthcare, and they can't find a job, and are broke.

    We must shut down our bases where no threat exists. We should fix the infrastructure. We should spank the NRA.

    We should act on Dr. K's always good advice. He won the Nobel Prize in economics.

  310. The Republican party ahs not suggested "getting rid of ss or medicare", but changing them so they will be there for our children and grandchildren. Planned parenthood, which is a misnomer, can be funded by private contributions. The government is not suppose to provide "money to live on" what does that even mean? You mentioned "life long free medical care"? Are you aware medical care isn't free? Why should I pay for your "free" medical care? I know You are very sure of your opinions, and I am not saying this to be nasty, but you are what is now known as a "low information voter"

  311. Forget the Platinum, let's make it out of Unobtainium. The name of that Avatar mineral represents the chances of having the Republicans do something reasonable for the country.

  312. This is dreadful. What does it say when a political party in a democratic country:

    runs on a platform of hating government and trying to do all it can to dismantle most national government operations, except the military

    declares its most important goal is to do all it can to make sure the President, who is a member of the opposing party, FAILS

    does what it can to carry out the above goals by obstructing most legislation related to nonmilitary matters, including using mandatory votes to extort unreasonable concessions to hasten govt. demise

    decides since it can't win popular elections the honest way, tries to game the system by gerrymandering, employing rules & actions to shut out groups from voting likely to vote for the opposing party

    not only represents the interests of the wealthiest members of society, but attempts to take away as many government services as possible from poor, working-class, and middle-class citizens; the party has no qualms about the impact of rising inequality on a democracy

    essentially seduces members of all classes below the upper class level to support and vote for the party via endless propaganda on corporate-owned media, blatant lies, & campaigns of disinformation and character assassination

    not only is openly contemptuous of knowledge, science, intelligence, evidence and facts, but features members of its party who are woefully ignorant of economics, science, & real life; works to undermine public education

    So mint that coin!

  313. It sounds a lot like the National Socialist Party in Germany circa 1932-1938.

  314. wrong on all points. They are opinions not facts

  315. I turned out to be right when I accused some elements of the tea party of racism last year. For those of you unfamiliar with the racist way of doing things this is an exercize in n----- baiting. The crackers in Congress pass a law that the President cannot obey and then hoo-haw at the fix they have created for him. They are so intent on making their point that a black man is not fit to govern that they are willing to put the country into the toilet in order to succeed. Lindsay Graham, Jeff Sessions, "liar" Joe Wilson are but the most obvious examples. The latent racism that is clung to by many less obvious representatives and senators is also important. They think they will be heroes in history when it seems to me more likely that the best they can hope for is to fail and be forgotten. If they succeed they will be remembered by our posterity as the evil men who foiled one of the best presidents we have ever had at a time when the country needed unity more than anything in order to overcome its challenges.

  316. Humans are weak flawed and sinful.

    We are also tribal by nature as a result of our ape East African origins.
    With limited resources and many enemies social groups arose to protect people, places and things.

    Europe is only two thirds the size of America with nations divided by culture and language the size of our states. And Europe is full of battlefields and grave yards of white people based upon nationality, language, faith and culture.

    So it is in the rest of the world. White Americans largely slaughtered each other during our civil war. The English fought the Scots, the Welsh and the Irish. Irish Catholics fight against Irish Protestants.

    It is all about race. The only biological race which is human.

    Rather than the imaginary race of history, politics, socioeconomics, education, nationality or ethnicity or faith.

  317. That is possibly the most racist comment I have ever seen. Nowhere is racism even hinted at in this article or in the proceedings that it details. Our president is (half) black. Get over it.The color of your skin does nothing to increase or decrease your intelligence or aptitude towards making decisions and fulfilling the responsibilities of the office or the President of the United States. And no, Obama is not one of the best presidents we have ever had. It actually seems that his greatest achievement, according to the media, is being (half) black. It saddens me to think that people will give him undeserving praise or critique merely because his skin is a slightly darker color than those who held the office previously. And by the way yes, voting for somebody because they are black is equally as racist as not voting for somebody because they are black. Shiboleth, thank you for being what is wrong with this country.

  318. You are confused obviously. There may be members of the tea lparty that are racist just as there are members of the democrat party that are antisemites. but the tea party is about fiscal control and individual rights and smaller government. race has nothing to do about it. If I think the president is the worst president in history, it doesn't mean i am a racist. In fact, skin color is a concern of liberals not conservatives. Remember a grea republican and conservative and man of god said "judge a man by the content of his character not the color of his skin" Oh about unity. THis president could have been the catalyst to end racial divide in the US, but he has used racism as a wedge every chance he could.

  319. If the republicans and their marketers have the imagination to foresee the sky falling over the deficit, why is there no concern over climate change or a fully armed public? The emptiness of a political strategy that seeks to convince the public that its president is stealing from them betrays all the ideals for which brave men and women have fought.

  320. The term "debt ceiling" is a big part of the problem.

    It easily lets the republicans pretend that it raises the nation's debt, which they use to generate anger to use as leverage for political extortions.

    Calling it something like "the debt-payment ceiling" would help tremendously.

    I am often struck by how republicans seem to control the language in which issues are being cast, and how poorly democrats respond to that. It's a serious problem.

  321. Like bad currency drives out good, their version of newspeak crowds out the truth.

  322. While civics classes and Krugman simplify the situation to lay the power (and blame) for spending on the Congress, the President does have the ability to pass executive orders that in effect increase spending. The President's role as commander of the armed forces and leader of international diplomacy is another de facto spending power. Presidents have great influence in starting and ending military actions.

    The fact is Krugman's overall philosophy on the debt and deficit gives the federal government carte blanche to create and spend as much currency as it pleases, then worry about the consequences later. The fiscal cliff legislation did increase tax rates, but in the crisis it also increased spending. The crisis increased the federal governments share of the economy and crowded out a partion of the the productive private sector. Congress is good at spending other peoples' money, but poor on accountability and getting value on the dollar they spend. Krugman's philosophy is blind to the fact that the federal government wastes more resources than it creates when it creates agencies that remove accountability and take over industries like education, mortgage lending, banking, healthcare, retirement planning, and food production.

    Forge a coin worth only $1000 in platinum and say it's really worth $1,000,000,000,000.00. Let the federal government spend it. Does that sound like accountability? Or does it sound like stealing?

  323. Keynesians believe that we pay back debt during "good" times (even those financed by a unsustainable Real Estate bubble hyped by destructive financial vehicles) and spend more during poor times.

    The GOP had the opportunity to pay down the debt starting in 2001, but declined. In fact they did the opposite ("Deficits don't matter"). And they doubled the National Debt during mostly expansionary times.

    So, your conclusion is that KRUGMAN (who, one might be reminded, has no role in actual government policy) is at fault because he endorses spending spending spending.

    Is that correct?

  324. First point: By what stretch of the imagination has the government taken "over industries like education, mortgage lending, banking, healthcare, retirement planning, and food production."? Only be equating "regulation" to "take over" can you make this connection. By the same argument, the government has taken over your computer because it regulates software licensing agreements through intellectual property law. Or that it has taken over baseball because the MLB receives an exemption from federal monopoly laws. Or that it has taken over the candy industry because it says that tootsie rolls can't contain human excrement. Regulation is not a take over. It is regulation. Unless you want to live in an anarchistic dystopia, get used to that fact.

    2nd point: you clearly don't understand how fiat money works. You say "Forge a coin worth only $1000 in platinum and say it's really worth $1,000,000,000,000.00. Let the federal government spend it. Does that sound like accountability? Or does it sound like stealing?" I ask you: how much money is the paper that a $1 bill is printed on worth? What about $1000 bill? Is the paper in the $1000 bill worth 1000X more than the $1 bill? No, because monetary value is a product of artificial faith in our currency system and not the commodity value of the medium its printed on. It is worth that much money because we assign it a value of that much.