The idea to mint a $1 trillion coin as a way to avoid raising the debt limit should be given serious consideration, Nobel prize winning economist and liberal pundit Paul Krugman believes. He advised comedian Jon Stewart to take the idea more seriously or risk "ruining his brand."
Krugman, professor of economics and international affairs at Princeton University, has advocated, on his New York Times blog, "Conscience of a Liberal," the $1 trillion coin idea if Congress does not raise the debt limit.
In a Jan. 7 post, Krugman argued that minting the coin would not cause any economic harm and not increasing the debt limit would be "far more ridiculous" than the $1 trillion coin.
The $1 trillion coin plan would work like this: the Treasury Department would mint a coin and designate its value at $1 trillion; the coin would then be used to buy back $1 trillion worth of debt held by the Federal Reserve. The plan would take advantage of a loophole in the law that allows the Treasury Department to print "commemorative coins" but does not designate a limit on the value of those coins.
"So this is all a gimmick -- but since the debt ceiling itself is crazy, allowing Congress to tell the president to spend money then tell him that he can't raise the money he's supposed to spend, there's a pretty good case for using whatever gimmicks come to hand," Krugman wrote in a Jan. 2 blog post.
In a Saturday blog post titled "Lazy Jon Stewart," Krugman accused the comedian and the staff of his satirical comedy news program, Comedy Central's "The Daily Show," of lacking professionalism, misunderstanding fiscal policy and "intellectual laziness."
On last Thursday's show, Stewart joked, "I'm not an economist, but if we're going to just make [bleep] up, I say go big or go home. How about a $20 trillion coin? Or maybe just forget about it, do one of these, 'oh, I was digging through the White House couch cushions and Eisenhower must've left this $100 quillion dollar bill laying around.'"
"Yes, it's a comedy show -- but the jokes are supposed to be (and usually are) _knowing_ jokes, which are funny and powerful precisely because the Daily Show people have done their homework and understand the real issues better than the alleged leaders spouting nonsense," Krugman wrote.
When asked about it in a Sunday interview on ABC News, Krugman argued that Stewart was "ruining his brand" by mocking the trillion dollar coin idea.
Writing for Slate, Eric Posner argued that the courts would not likely uphold the trillion dollar coin scheme if the administration went through with it, because the Constitution explicitly gives Congress authority over budgetary matters such as spending, taxation and debt. Obama could even be impeached over the matter, he argues.
On Saturday, the Treasury Department released a statement saying that the law does not give it the authority to produce coins for the purpose of avoiding the debt ceiling.
At the time of this publication, Stewart had not responded to Krugman. The first episode of "The Daily Show" to air since Krugman's criticisms will be Monday night.