The weekend’s most important development wasn’t that the Treasury Department deep-sixed the platinum coin per se, but that the White House more-or-less declared it won’t resort to any debt limit work around if Republicans refuse to increase it before borrowing authority lapses.
Between the official statement, a long conversation with a senior White House official, and President Obama’s press conference this morning, I take this to be more than just an attempt to clarify the stakes and dial up the pressure on Republicans to raise the debt limit drama free. There really is no “Plan B” if we breach the debt limit, other than that the government will shirk 40 percent of its obligations and Republicans will feel enormous pressure to raise it before the economic fallout becomes too catastrophic.
But as troubling as it is to take a flier on House Republicans’ willingness and ability to raise the debt limit before the deadline, platinum coin advocates and advocates of other debt limit workarounds should recognize that this is how the standoff would have had to unfold even if there were a Plan B.Announcing that there’s a Plan B in advance of the deadline would be a bit less shrewd than revealing an ace in the hole before betting is over. In a situation like the debt limit fight, revealing the existence of a fallback plan would be all but self-fulfilling — and thus, for all the reasons Josh outlined here, would amount to assuming all of the downside risk the GOP is creating for itself by making outlandish threats in the first place.
In that way, platinum coin advocates did themselves a huge disservice by making enough of a stink about their backup plan that the administration was forced to weigh in on, and thus reject, it.
So there’s no ace in the hole. Whether that’s legally ineluctable or a decision the administration made to force Republicans to reckon with their own behavior, it’s where we are. And now instead of tussling with Obama over the legitimacy of platinum coin seigniorage, Republicans have to answer for this, as Obama put it at today’s press conference: “If congressional Republicans refuse to pay America’s bills on time, Social Security checks, veterans benefits will be delayed. We might not be able to pay our troops or honor our contracts with small-business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear materials would not get their paychecks. Investors around the world will ask if the United States of America is in fact a safe bet. Markets could go haywire. Interest rates would spike for anyone who borrowed money.”
They only bear responsibility for those consequences if Obama’s hands are truly tied by the debt limit law.