Fixing the debt ceiling with a trillion dollar platinum coin

Make a silly demand, get a silly concession.

It's always interesting seeing an idea whose time has come, and today's seems to be the "platinum coin option" for the US.

America will, in two months, hit the debt ceiling. Again. The federal government will be denied, by law, the money it has been ordered to spend, by law. The three options facing it, in conventional wisdom, are a total government shut-down, a default on its loans, or the raising of the ceiling.

Since the first two are, frankly, unthinkable, the last is the only thing the administration can do. The Republicans know this, and are prepared to leverage their image as an unhinged party which would metaphorically kill the hostages to gain policy concessions.

But there is actually a fourth option. It's leveraging a quirk in the laws of the nation, but it is, by any reading of those laws, entirely legal. United States law says:

31 USC § 5112 (k) The Secretary [of the Treasury] may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

That is: at any time, the Treasury Secretary – Tim Geithner – can mint platinum coins in any denomination.

The other important aspect is how government spending is actually accounted for. The Treasury has a "bank account" at the Federal Reserve. When it pays someone, it's the Fed which hands the money over. When it needs money to put in that bank, it sells bonds at auction.

The debt ceiling is, in that simple version of the story, basically a ban on the Treasury selling any more bonds. As a result, it's bank account will run dry, and all hell will break loose.

But if Geithner mints a trillion dollar platinum coin, he can just waltz over to the Fed, deposit that, and the government's ability to spend is restored.

The plan sounds too good to be true, but it's really not. Joe Weisenthal has a bumper post debunking the biggest myths about it, but the trick to understanding it is to think of it as a legal, not monetary, trick. In terms of the real economy – outside of strange intragovernmental transfers designed to get around bizarre anachronistic limits – nothing has changed. The state is still taking money in through borrowing and taxing, and still putting money out through spending. It's just some of the borrowing is transferred from the Treasury, which does it under the authority it has to raise the national debt, to the Federal Reserve, which does it under the authority it has to borrow against assets it holds. Like, for instance, a trillion dollar coin.

This plan has been knocking around for years, now. It was first suggested during the last showdown, in 2011, by Pragmatic Capitalist's Cullen Roche. Weisenthal jumped on board, and then slowly so did others.

But in the last couple of days, there has been a White House petition calling for the President to do it, discussions in Congress, Paul Krugman mulling over the idea and a Huffington Post front page on it.

But the best argument has been Josh Barro's in Bloomberg. Barrow takes the legal quirks of the situation, and applies them to a political analysis. After all, although the President has the power to do it, doesn't mean it wouldn't be extremely politically damaging to actually go ahead with it. Barro's solution:

Hitting the debt ceiling isn't an option. It's no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn't count as a "concession," and it's nutty for Obama to have to give substantive policy ground to get one.

Monetizing deficits through direct presidential control of the currency, in lieu of borrowing, is also no way to run a country. It's silly, and it's perfectly legal. Agreeing not to do so is therefore the ideal "concession" for Obama to offer in return for Republicans agreeing to end the threat of a debt-default crisis.

Make a silly demand, get a silly concession. Perfect!

A non-platinum, single dollar coin. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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As children face a mental health crisis, should schools take the lead in fighting it?

There is a crisis affecting the mental health of England's young people. As Children’s Mental Health Week gets underway, the government must put schools at the heart of mental health services.

Three children in every classroom have a diagnosable mental health condition. Half of these are conduct (behavioural) disorders, while one third are emotional disorders such as stress, anxiety and depression, which often becomes outwardly apparent through self-harm. There was a staggering 52 per cent jump in hospital admissions for children and young people who had self-harmed between 2009 and 2015.

Schools and teachers have consistently reported the scale of the problem since 2009. Last year, over half of teachers reported that more of their pupils experience mental health problems than in the past. But teachers also consistently report how ill-equipped they feel to meet pupils’ mental health needs, and often cite a lack of training, expertise and support from NHS services.

Part of the reason for the increased pressure on schools is that there are now fewer ‘early intervention’ and low-level mental health services based in the community. Cuts to local authority budgets since 2010 have resulted in significant erosion of these services, despite strong evidence of their effectiveness in reducing escalation and crises further down the line. According to the parliamentary Health Select Committee, this has led specialist child and adolescent mental health services (CAMHS) to become inundated with more severe and complex cases that have been allowed to escalate through a lack of early treatment.

This matters.  Allowing the mental health of children and young people to deteriorate to this extent will prevent us from creating a healthy, happy, economically productive society.

So what part should schools play in government’s response?

During the last parliament, the government played down the role of schools in meeting pupils’ mental health and wider emotional needs. Michael Gove, during his tenure as education secretary, made a conscious decision to move away from the Every Child Matters framework, which obliged local authorities to work with schools and health services to improve the ‘physical and mental wellbeing’ of all children in their local area. He argued that schools policy needed to focus more heavily on academic outcomes and educational rigour, and references to children’s wellbeing were removed from the Ofsted framework. This created a false dichotomy between academic standards and pupils’ mental health - why can’t a school promote both?

But since Gove was replaced by Nicky Morgan, a new window of opportunity for meaningful reform has opened. Following her appointment in 2014, Morgan has called on schools to promote resilience and protect pupil’s mental health when problems first arise. The Department for Education has made tentative steps in this direction, publishing advice on counselling in schools and announcing a new pilot scheme to link schools with NHS services.

However, much more needs to be done.

The only way to break the pressures on both mental health services and schools is to reinvest in early intervention services of the kind that local authorities and the NHS have been forced to cut over the last few years. But this time around there should be one major difference – there is a compelling case that services should be based largely inside schools.

There are strong arguments for why schools are best placed to provide mental health services. Schools see young people more than any other service, giving them a unique ability to get to hard-to-reach children and young people and build meaningful relationships with them over time. Studies have shown that children and young people largely prefer to see a counsellor in school rather than in an outside environment, and attendance rates for school-based services such as those provided by the charity Place2Be are often better than those for CAMHS. Young people have reported that for low-level conditions such as stress and anxiety, a clinical NHS setting can sometimes be daunting and off-putting.

There are already examples of innovative schools which combine mental health and wellbeing provision with a strong academic curriculum. For example, School 21 in East London dedicates 2.5 hours per week to wellbeing, creating opportunities for pastoral staff to identify problems as early as possible.

There is a huge opportunity for Nicky Morgan – as well as Labour’s shadow mental health minister Luciana Berger – to call for schools to be placed at the heart of a reconstructed early intervention infrastructure.

This will, though, require a huge cultural shift. Politicians, policymakers, commissioners and school leaders must be brave enough to make the leap in to reimagining schools as providers of health as well as education services.

Craig Thorley is a research fellow at IPPR, where he leads work on mental health. Follow him @craigjthorley