The idea to produce platinum coins as a way to raise $1 trillion in revenue and avert the debt ceiling battle with the Congress was rejected on Saturday by the US Treasury and the Federal Reserve.
The idea behind the platinum coin strategy was for the government to mint a coin or several from the precious metal and set its value at $1 trillion. The Federal Reserve would then deposit the coin in the Treasury account that would credit the account by $1 trillion and the nation could then use this value to pay off its debts.
Both the Treasury and the Fed concluded that doing so is not a viable option.
"Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit," said Treasury spokesman Anthony Coley in a statement.
The idea had gained some support among the Democrats because they feared opposition from Republicans, who reject increasing the debt ceiling, if deep spending cuts were not made. Congress stubbornness in 2011 on not to raise the debt ceiling brought the country on the brink of a debt default.
The nation’s debt ceiling, which is basically its borrowing limit, was reached on Dec. 31, 2012. Since then, the Treasury has been employing untraditional methods to finance the government. However, even those are expected to run out by next month.
Now, with the platinum coin issue resolved, White House Press Secretary Jay Carney says its up to the Congress to collaborate in raising the debt ceiling.
"Congress can pay its bills or they can fail to act and put the nation into default," he said. "When congressional Republicans played politics with this issue last time, putting us at the edge of default, it was a blow to our economic recovery, causing our nation's credit rating to be downgraded."
There has been no change in President Barack Obama’s position over a line in the 14th amendment in the US Constitution, which says that the validity of the public debt should not be questioned. The law, as per the understanding of some Democrats, gives Obama the authority to raise the debt ceiling on his own. However, the White House says that it does not believe such an approach would stand up legally.
"Congress needs to do its job," said Carney.