It's not every day you get an email from a former director of the U.S. Mint (unless you're married to one, probably) — but it's also not every day that you write about the very real possibility that the U.S. Treasury might mint a platinum coin worth one trillion dollars. Either way, it was an excellent surprise to hear from Philip Diehl, the former Mint director and Treasury chief of staff who drafted Sec. 5112 of title 31, United States Code with Rep. Mike Castle — in other words, the guy who wrote the "trillion-dollar coin" law. His take? Not only does the law clearly allow for the coin to be minted, it also would have "no negative macroeconomic effects."
While we at Gawker support the trillion-dollar coin as much for the possibility of making it 16 feet tall and engraved with the runes from Zep IV as for its policy merits, it's good to hear that the co-drafter of the law itself is essentially on board. Here's his full email:
I'm the former Mint director and Treasury chief of staff who, with Rep. Mike Castle, wrote the platinum coin law (Sec. 5112 of title 31, United States Code) and oversaw minting of the original coin authorized by the law, so I'm in a unique position to address some confusion I've seen in the media about the $1 trillion platinum coin proposal.
- In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years. The Secretary's authority is derived from an Act of Congress (in fact, a GOP Congress) under power expressly granted to Congress in the Constitution (Article 1, Section 8). What is unusual about the law is that it gives the Secretary discretion regarding all specifications of the coin, including denominations.
- The accounting treatment of the coin is identical to the treatment of all other coins. The Mint strikes the coin, ships it to the Fed, books $1 trillion, and transfers $1 trillion to the treasury's general fund where it is available to finance government operations just like with proceeds of bond sales or additional tax revenues. The same applies for a quarter dollar.
- Once the debt limit is raised, the Fed could ship the coin back to the Mint where the accounting treatment would be reversed and the coin melted. The coin would never be "issued" or circulated and bonds would not be needed to back the coin.
- There are no negative macroeconomic effects. This works just like additional tax revenue or borrowing under a higher debt limit. In fact, when the debt limit is raised, Treasury would sell more bonds, the $1 trillion dollars would be taken off the books, and the coin would be melted.
- This does not raise the debt limit so it can't be characterized as circumventing congressional authority over the debt limit. Rather, it delays when the debt limit is reached. Those who claim otherwise are misinformed or pursuing an agenda.
- This preserves congressional authority over the debt limit in a way that reliance on the 14th Amendment would not. It also avoids the protracted court battles the 14th Amendment option would entail and avoids another confrontation with the Roberts Court.
- Any court challenge is likely to be quickly dismissed since (1) authority to mint the coin is firmly rooted in law that itself is grounded in the expressed constitutional powers of Congress, (2) Treasury has routinely exercised this authority since the birth of the republic, and (3) the accounting treatment of the coin is entirely routine.
- Yes, this is an unintended consequence of the platinum coin bill, but how many other laws have had unintended consequences? Most, I'd guess. The fact that this use of the authority granted by Congress is unintended has no bearing on its legality or constitutionality.
Philip N. Diehl
United States Mint