Fast forward to this fall. Americans are thinking about Halloween costumes or how their kids are faring in the new school year, but one more pressing and widespread concern occupies the nation’s minds: the collapsing global economy, which has been spinning out with no signs of slowing, leading to heavy job losses and disappearing savings and investments. Countries worldwide have been hit with economic disaster and are reconsidering the dollar as a reserve currency.
The culprit isn’t another virus or some natural disaster, and in fact the whole thing could have been avoided with a few lines of legislation guided through by a leader with backbone. Instead, the mess now lays at the feet of House Speaker Kevin McCarthy and the band of extremists he prostrated to in his quest for the gavel. Faced with the loss of his power, McCarthy has stopped the House from raising the debt ceiling and allowed the U.S. to default on its debts.
In fact, we don’t have to wait months to begin feeling the impacts of this dangerous game. Treasury Secretary Janet Yellen has already informed Congress that the government will hit its debt ceiling this week, and while it won’t actually run out of funds to pay its obligations until sometime around June, this lag can already send shockwaves through the international economic system.
Whatever legacy McCarthy thinks he can cement as speaker will be a footnote to the headline of his having stood aside as the economy was shot by a handful of zealots. If he won’t do it, someone else will have to, and that can be Yellen herself, under direction from President Biden.
The zany idea of minting a $1 trillion or similar platinum coin and depositing it into the Treasury’s accounts — a legally bulletproof idea, according to several scholars — often gets dismissed offhand for being a little madcap. Yet sometimes the best fix to an inane problem is an inane solution, and it’s a much better precedent than calling the nation’s creditworthiness into question.
