Opinion

Minting a $1 trillion distraction

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Mark Calabria
Director of Financial Regulation Studies, Cato Institute
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      Mark Calabria

      Mark A. Calabria, is director of financial regulation studies at the Cato Institute. Before joining Cato in 2009, he spent six years as a member of the senior professional staff of the U.S. Senate Committee on Banking, Housing and Urban Affairs. In that position, Calabria handled issues related to housing, mortgage finance, economics, banking and insurance for Ranking Member Richard Shelby (R-AL). Prior to his service on Capitol Hill, Calabria served as Deputy Assistant Secretary for Regulatory Affairs at the U.S. Department of Housing and Urban Development, and also held a variety of positions at Harvard University's Joint Center for Housing Studies, the National Association of Home Builders and the National Association of Realtors. Calabria has also been a Research Associate with the U.S. Census Bureau's Center for Economic Studies. He has extensive experience evaluating the impacts of legislative and regulatory proposals on financial and real estate markets, with particular emphasis on how policy changes in Washington affect low and moderate income households. He holds a doctorate in economics from George Mason University.

Defenders of the $1 trillion coin say that while the idea is a gimmick, so is the debt ceiling. This view misses the role played by the debt ceiling. If there wasn’t a debt ceiling in place, we wouldn’t be debating the need for more spending cuts right now. I’d be the first to admit that the debt ceiling hasn’t enforced fiscal discipline on Washington. But without it, we wouldn’t even be having the discussion. The debt ceiling is no more a gimmick than the credit limit on one’s credit card.

My primary objection to minting a $1 trillion coin, however, is that doing so would not, in any way, address the underlying fiscal problems facing our country. At heart, the coin idea is an attempt to avoid fixing those problems. Any politician embracing this gimmick would be displaying a lack of leadership and responsibility that is reckless even by Washington standards. We need to stop with the distractions and focus on putting America on a more responsible fiscal path.

Mark A. Calabria is the director of financial regulation studies at the Cato Institute.