Here's why Ben Bernanke killed the platinum coin, and what it means for the debt-ceiling showdown
The coin will not be minted.
At least, not in anything remotely close to 13-digit denominations. As Ezra Klein of the Washington Post reports, the Treasury and Federal Reserve have ruled out creating a trillion-dollar coin, which was a real possibility thanks to a crazy loophole, to stop us from defaulting on our obligations if the debt ceiling isn't raised. It's Congress or bust, when it comes to paying our bills on time.
This was probably the least surprising development in the history of developments. It wasn't just that the trillion-dollar coin would have been a political liability because it sounds silly -- that was the best, and only, argument against it -- but rather that it required the Fed to give up its sole control of monetary policy. The Fed would not do that. Now, the Treasury minting trillion-dollar coins sure sounds different from the Fed buying bonds, but it's not. It's just sterilized quantitative easing (QE), albeit with a platinum tint. Or, in English, it's printing money, buying stuff, and preventing this new money from increasing inflation. The Fed does this when it 1) electronically "prints" money, 2) buys bonds from banks with this new money, and 3) ties up these new bank reserves with operations like reverse repos. The Treasury does the same when it 1) mints the trillion-dollar coin, 2) uses it to pay for the government's existing obligations, and 3) the Fed sells bonds in equal measure to suck the money out.
You might wonder why the Fed would play along if the Treasury turned to coin seigniorage. Answer: the Fed has its inflation target, and it cares very much about hitting it. The Fed would be compelled to counter the Treasury's coin-minting, although, as as Greg Ip of The Economist points out, the Fed might not need to do so for quite awhile, and could resort to raising interest rates on interbank lending and reserves instead of selling long-term bonds. In either case, the Treasury would be dragging the Fed into QE it didn't want, and, as University of Oregon professor Tim Duy put it, effectively blurring the line between fiscal and monetary policy. Fed independence would be a thing of the past ... unless it killed the coin first. Which, of course, it did, as Zeke Miller of Buzzfeed reports. The platinum coin gambit depended on the Fed accepting it as legal currency for the Treasury's account, and the Fed said it would not. RIP, trillion-dollar coin.
Now, the trillion-dollar coin may be dead, but the debt ceiling is not. President Obama continues to insist he will not negotiate over it, but the administration has said it won't use either of the most likely work-arounds -- the 14th amendment or the platinum coin -- if it comes to that. That leaves the president with (at least) four more outlandish-ish options if House Republicans refuse to pay the bills they authorized, and one actual option. Here they are, from least likely to most likely.
-- The Treasury could repo Mount Rushmore to the Fed. As Karl Smith of Modeled Behavior argues, the Treasury could theoretically sell anything valuable enough, like offshore oil rights, to the Fed, and agree to buy it back later. This kind of repurchase (repo) agreement would give the Treasury cash flow if it's running so low that it can't pay the interest on our debt, but there are two big problems. First, repo agreements are not, economically-speaking, sales, but rather loans, so it would almost certainly violate the debt ceiling. And second, there's no way the Fed would do this. So there's that.
-- The Fed could send some of its bonds back to the Treasury as dividends. Printing money is a pretty good way to make money, never more so than the past few years. The Fed remits most of its profits -- $89 billion in 2012 -- to the Treasury, which kind of makes the Treasury its sole shareholder. As @IvanTheK first suggested, the Fed could advance some of these profits to the Treasury as a dividend if there wasn't enough incoming revenue to pay the interest on the debt on any given day during a debt ceiling standoff. It's an elegant solution, but, again, not one the Fed is likely to go for.
-- Use IOUs to pay our bills. If we don't hit the debt ceiling, we will immediately have to stop paying 40 percent of our bills ... unless we pay the rest with IOUs. Paul Krugman proposed something along these lines, and law professor Edward Kleinbard points out that California successfully used them during its own budget crisis in 2009. Back then, California paid people with IOUs yielding 3.75 percent that people could trade to banks for cash at a slight haircut. In other words, the banks made money off the trades. The federal government could do the same, but there are a few legal hurdles. If the IOUs pay any interest, it's hard to see how they're not debt; but if they don't pay any interest, it's hard to see how they're not money. Either would be illegal. Maybe everybody would be happy enough with this arrangement not to challenge it, like in California, but maybe not -- not to mention the awful optics of "Obama dollars".
-- Refuse to negotiate, and blame the Republicans for any economic damage. Welcome to everybody's favorite game, debt ceiling chicken! Here's how it works. Obama says there's nothing he can do to lift the debt ceiling on his own; that's it up to Republicans to pay the country's bills; and that if they don't, they will get blamed for Social Security checks not going out. It's the strategy former Treasury Secretary Robert Rubin used back in the mid-90s when then-Speaker Newt Gingrich threatened to hold the debt ceiling hostage, and it's the strategy Obama seems to be using now. As Ezra Klein points out, Obama has deliberately ruled out all of these different debt ceiling end-arounds, because he doesn't want Republicans to think they have any alternative to increasing it themselves. Now, maybe half of them really do welcome default, as Politico reports, but maybe not. That's a terrifying bunch of "maybes", but it's where we are today.
In other words, Obama is happy not to mint the coin, because he thinks minting it reduces his leverage. Now it's a psychological game of chicken, with Obama and Republicans accelerating toward the other, each convinced they cannot swerve, and when they meet in the middle, they'll set off the mother of all global market crashes.
Ordinary Americans will be able to submit—and vote on—questions to be considered when the candidates meet again.
Viewers unhappy with the questions asked at Monday night’s debate will have a shot to weigh in before Donald Trump and Hillary Clinton meet again on October 9: For the first time, the networks producing the town-hall style debate have agreed to accept questions voted on through the internet.
The Commission on Presidential Debates had already announced that the second of three debates would feature questions submitted online in addition to those asked by the traditional studio audience. But on Tuesday morning, the organizers confirmed they are embracing a format that a broad bipartisan cross-section of activist and civic groups known as the Open Debate Coalition have been pushing for years. Americans will be able to submit and then vote on questions online at PresidentialOpenQuestions.com, and ABC and CNN have agreed to consider the 30 most popular queries when they jointly plan the debate.
Conservatives have put families and communities at the center of their conception of a better America—but they’re notably absent from the Republican nominee’s account.
Again and again at Monday night’s debate, Hillary Clinton attacked Donald Trump’s record in business. She accused him of caring only about himself. Again and again, he pleaded guilty.
When Clinton quoted Trump as cheering for a housing crisis, Trump responded, “That’s called business.” When Clinton accused Trump of not paying taxes, Trump answered, “That makes me smart.” When Clinton attacked Trump for declaring bankruptcy to avoid paying the people he owed, Trump replied, “I take advantage of the laws of the nation because I’m running a company.” Clinton set out to paint Trump as selfish and unethical. Trump basically conceded the charge.
Commentators are declaring Trump’s answers a tactical mistake. But they’re more than that. They show how unmoored he is from conservatism’s conception of America.
The belief in a common purpose that long defined America’s civil religion was strikingly absent on Monday night.
Civil religion died on Monday night.
For more than 90 minutes, two presidential candidates traded charges on stage. The bitterness and solipsism of their debate offered an unnerving glimpse of American politics in a post-Christian age, devoid of the framework that has long bound the nation together.
Hillary Clinton may have offered little sense of humility, of obligation, of responsibility in Hempstead, but it was Donald Trump who directly rejected those virtues, reframing them instead as vices. He painted altruism as a sucker’s game, and left sacrifice for the losers. It was a performance that made clear one broader meaning of his candidacy—the eclipse of the values that long defined America.
In a unique, home-spun experiment, researchers found that centripetal force could help people pass kidney stones—before they become a serious health-care cost.
East Lansing, Michigan, becomes a ghost town during spring break. Families head south, often to the theme parks in Orlando. A week later, the Midwesterners return sunburned and bereft of disposable income, and, urological surgeon David Wartinger noticed, some also come home with fewer kidney stones.
Wartinger is a professor emeritus at Michigan State, where he has dealt for decades with the scourge of kidney stones, which affect around one in 10 people at some point in life. Most are small, and they pass through us without issue. But many linger in our kidneys and grow, sending hundreds of thousands of people to emergency rooms and costing around $3.8 billion every year in treatment and extraction. The pain of passing a larger stone is often compared to child birth.
If this were Clinton, wild speculation would abound.
At the first presidential debate last night, Donald Trump sniffed audibly several times.
Here is a compilation, composed by some patient people at Slate:
Some consider this “breathing.” Others hear something more.
Over the course of this election cycle, pundits have breached all standards with regard to conjecture about the bodies of the candidates and their functionality. Some took Hillary Clinton’s coughing fit as proof of imminent peril. A Florida anesthesiologist got millions of YouTube views for claiming to have used “CIA techniques” to diagnose her with “advanced neurodegenerative disease.”
Donald Trump himself has said that Clinton “lacks the mental and physical stamina to take on ISIS.” As she worked despite pneumonia, he said with an eyebrow raised, “something’s going on.”
For decades, the candidate has willfully inflicted pain and humiliation.
Donald J. Trump has a cruel streak. He willfully causes pain and distress to others. And he repeats this public behavior so frequently that it’s fair to call it a character trait. Any single example would be off-putting but forgivable. Being shown many examples across many years should make any decent person recoil in disgust.
Judge for yourself if these examples qualify.
* * *
In national politics, harsh attacks are to be expected. I certainly don’t fault Trump for calling Hillary Clinton dishonest, or wrongheaded, or possessed of bad judgment, even if it’s a jarring departure from the glowing compliments that he used to pay her.
But even in a realm where the harshest critiques are part of the civic process, Trump crossed a line this week when he declared his intention to invite Gennifer Flowers to today’s presidential debate. What kind of man invites a husband’s former mistress to an event to taunt his wife? Trump managed to launch an attack that couldn’t be less relevant to his opponent’s qualifications or more personally cruel. His campaign and his running-mate later said that it was all a big joke. No matter. Whether in earnest or in jest, Trump showed his tendency to humiliate others.
In North Carolina, the Democratic candidate basked in her debate victory. As for her supporters, they’re feeling better, but they’re not ready to exhale.
RALEIGH, N.C.— "Did anybody see that debate last night? Ooooh yes," Hillary Clinton said, her first words after striding confidently out on stage at Wake Technical Community College Tuesday afternoon.
As a capacity crowd cheered, she added, "One down, two to go."
Celebration and relief added to the thick humidity of late summerat Clinton’s event inNorth Carolina. Post-debate analysis is in that awkward in-between state, after the pundits have rendered their verdicts and before high-quality polling has measured the nation’s response. But the Democratic nominee seemed sure that she was the victor.
It was Clinton’s first event after the first presidential debate Monday evening in Hempstead, New York. One sign of her confidence coming out of that encounter: As I approached the rally, a man asked for a hand loading a heavy box into his car. He was the teleprompter man, he said, but when he arrived in Raleigh, he’d been told that Clinton had decided to do without the prompter. He was turning around and heading back to Washington, D.C.
The way people talk about the internet is, as with most things, imprecise. They say “literally” when they mean “figuratively." They say “the internet” when they mean “the web.” (The internet is the structural underpinning of the web, which is what you see when you’re clicking around online.)
And yet we’ve come a long way since the days of “surfing the net,” “the information superhighway,” and “cyberspace.” Most of us, anyway. Politicians, in particular, still have a knack for evoking 1990s web lingo when they find themselves commenting on modern information systems. (The recent congressional record is full of this kind of thing.)
“Cyberspace,” in particular, is an old-school favorite that people just can’t seem to shake—in large part because of the rise of concerns about “cybersecurity,” which has kept the “cyber” prefix in use. In the mid 1990s, the term “cyber” by itself was often a shorthand for “cybersex,” or explicit online chatting. The term “cyberspace,” though, is usually traced back to William Gibson’s 1984 novel Neuromancer, which describes a network of connected computers that creates a mass “consensual hallucination.” Before that, “cyber” goes back to Norbert Wiener’s epic writings on cybernetics in the 1940s.
The Democrat’s command and poise left her rival looking frustrated, peevish, and out of sorts.
Monday brought the first debate of the presidential season, but it often felt like two separate debates. One, from Hillary Clinton, was wonky, crisp, and polished; if not always inspiring, it was professional and careful. The other, from Donald Trump, was freewheeling, aggressive, and meandering, occasionally landing a hard blow but often substance-less and hard to follow. But the two debates intersected at times, sometimes raucously, as Trump repeatedly broke in to interrupt Clinton.
It was a commanding performance from the Democratic nominee. Clinton delivered a series of detailed answers on subjects ranging from race to the Middle East to tax policy. Meanwhile, she delivered a string of attacks on Trump, assailing him for stiffing contractors, refusing to release his tax returns, fomenting birtherism, and caricaturing black America. She stumbled only occasionally, but left few openings for Trump. She remained calm and often smiling as Trump repeatedly attacked her and interrupted her answers—doing it so often that moderator Lester Holt, often a spectral presence at the debate, finally cut in twice in short order to chide him. (Vox counted 40 instances; Clinton made some of her own interruptions, but fewer.) Clinton displayed a sort of swagger perhaps not seen since her hearing before Congress on Benghazi.
Donald J. Trump on why he hoped for the housing market to collapse
In 2006, two years before the crash that would destroy the livelihoods of millions of Americans, Donald J. Trump said he “sort of hope[d]” for that eventuality. He stood to make money.
Confronted by Hillary Clinton with that comment at Monday’s debate, Trump did nothing to disavow it. To the contrary, he defended it: “That’s called business, by the way,” he condescended.
Together these remarks showcase a callous indifference to other people’s hardships—an indifference that, my colleague Conor Friedersdorf writes, “may matter little for a Manhattan mogul, but matters very much for someone asking to be entrusted with representing every American.” No reasonable person who has followed along over these last few months could view such an attitude as an aberration. Rather, it fits in precisely with Trump’s long and documented history of putting himself first, even when it means demolishing those who are in his way. Here is a person, a person who may very well become the next president of the United States, who is seemingly unable to imagine what it’s like to be someone else.