Last Saturday the U.S. Treasury said it would not be minting a trillion-dollar coin.
Imagine Treasury Secretary Tim Geithner holding out a metallic disc to Federal Reserve Chairman Ben Bernanke. “Here’s a trillion dollars,” he says. “We minted it this morning. Put it on deposit so we can write checks on it.”
This specious idea, which has been traced to a 2010 blog post by someone calling himself “Beowulf,” became in the past few weeks a favorite in the national press. It was pitched as a way for Democrats to outfox Republicans in the upcoming debt-ceiling fight, in which the Republicans threaten to block the Treasury from borrowing unless the Democrats agree to cut spending. With a trillion-dollar coin, the Treasury would not need to borrow.
Was this serious? Last Friday, Democratic leaders in the U.S. Senate, including Washington’s Patty Murray, the new head of the Budget Committee, sent a public letter to President Obama. The letter urged him to do everything within the law to keep the government in cash, and not wait for Congress. It didn’t mention the trillion-dollar coin, but was immediately taken as political cover for it.
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In the press, the coin’s champion has been economist Paul Krugman. In his syndicated column, The New York Times’ house inflationist allowed that a trillion-dollar coin might “look slightly silly,” but that he was for it. Krugman was annoyed when Jon Stewart made fun of the idea on “The Daily Show.” Stewart was supposed to be on his side.
Here is an odd thing about the left. When it comes to a rise in the sea level, they care about the future. If it’s a rise in the price level, they say, in effect, “Forget the future. Do the trillion.”
President Obama has declined to do it, to his credit. The dollar is debased enough already. But Obama’s overall record on spending and debt is not good. That the trillion-dollar coin was even considered says much about the whole culture in Washington, D.C.
Contrast this with Olympia. The politicians in our state’s capital are of the same brands as in the other Washington, and have the same appetites for public spending. But they can’t coin money and don’t allow themselves to borrow for operating budgets. They passed a law last year requiring budgets to balance four years out. Another law, passed in November by the people, requires a two-thirds vote of both houses or a majority vote of the people to raise taxes.
The result is leaders who are tougher-minded. Last week the new leader of the conservative-moderate coalition in the Senate, Sen. Rodney Tom, D- Medina, suggested phasing out the state’s Guaranteed Education Tuition program. It has created a $631-million hole in the budget, he said, and it is “not a core service.”
Sen. Andy Hill, R-Kirkland, the new chairman of Senate Ways and Means, favors differential tuition — charging engineering majors at the University of Washington more than English majors because they will earn more when they graduate. “The market can bear it,” Hill said.
Rep. Ross Hunter, D-Bellevue, the chairman of House Appropriations, is for extending the temporary tax on big-brewery beer and applying it to microbrews. “We should tax all beer the same instead of taxing poor people’s beer and not rich people’s beer,” he said.
These are not popular positions. But they or something like them are necessary positions. Legislators here cannot offer budgets funded by borrowing or by creating money from nothing.
The other Washington could use the same discipline.
Bruce Ramsey’s column appears regularly on editorial pages of The Times. His email address is firstname.lastname@example.org