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The White House says no to minting a $1 trillion coin to sidestep McConnell and ease debt ceiling standoff in Congress

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Joe Biden
President Joe Biden delivers remarks on his plan to stop the spread of the Delta variant and boost COVID-19 vaccinations, in the State Dining Room of the White House complex on Thursday, Sept. 9, 2021 in Washington, DC. Kent Nishimura / Los Angeles Times via Getty Images
  • The White House rejected the idea of minting a coin to circumvent Congress and avoid a default if necessary.

  • "There is only one viable option to deal with the debt limit: Congress needs to increase or suspend it," a White House spokesman said.

  • Experts say the Treasury Department has the ability to mint a coin of any denomination, and theoretically use it to avert default.

  • See more stories on Insider's business page.

The White House on Monday again ruled out minting a "trillion-dollar coin" to sidestep GOP refusals to aid Democrats on raising the debt ceiling, as the standoff in Congress over who bears responsibility for paying America's bills appeared to worsen with no resolution in sight.

"There is only one viable option to deal with the debt limit: Congress needs to increase or suspend it, as it has done approximately 80 times, including three times during the last Administration," White House spokesperson Mike Gwin said in a statement to Insider.

Politico first reported the Biden administration rejecting the step.

It closes off one avenue for the White House to defuse the tension as lawmakers barreled towards a potentially devastating default. Experts say the Treasury Department has the ability to mint a coin of any denomination, which could theoretically be applied here to avert a political showdown ending in default.

Congressional Republicans, spearheaded by Senate Minority Leader Mitch McConnell, are digging in on their rejection to renew the US's ability to continue paying its bills, known as the debt ceiling.

Republicans argue it's up to Democratic lawmakers to raise it to cover their planned $3.5 trillion social spending plan, along with the $1.9 trillion stimulus law from earlier in the year. Democrats are rebuffing that, entrenched in their belief that Republicans shouldn't shirk from their responsibility.

Lifting the nation's borrowing cap allows the US to pay its bills for past spending and does not grow the national debt.

Republicans raised or suspended the debt ceiling three times during the Trump administration. The national debt grew by $7.8 trillion as both parties struck budget deals adding to domestic and defense spending, and stepped in with emergency aid last year when the pandemic slammed into the economy. Republicans under President Donald Trump approved a tax cut that grew the national debt by $2 trillion.

The Treasury Department is conserving cash as part of a set of "extraordinary measures" aimed at keeping the US afloat for a limited time. But experts say the agency is about to exhaust its abilities, setting the stage for a default that could cause financial chaos and even spark a recession.

Treasury Secretary Janet Yellen implored Congress in a Wall Street Journal op-ed published Sunday to take action on the debt ceiling. She warned a default could cause up to 50 million seniors to face an abrupt halt to Social Security checks, missed paychecks for US troops, and delays in monthly child tax credit checks.

House Speaker Nancy Pelosi said Sunday in a letter to Democrats they're seeking to enlist GOP lawmakers. That could potentially be in a short-term government funding bill to avert a shutdown after September 30. "When we take up the debt limit this month, we expect it to be bipartisan once more," she said.

Still, senior Democrats aren't ruling out raising it on their own in a party-line vote using the reconciliation process, the same route being employed for their social spending plan. "I'm not fine with that but if that's what it takes, that's what it will take," House Democratic Whip Jim Clyburn said in a Sunday interview on CNN's "State of the Union."

Read the original article on Business Insider