Rep. Rashida Tlaib (D-Mich.) released a sweeping proposal to deal with the economic turmoil caused by the novel Coronavirus (COVID-19) pandemic and ensuing panic.
The plan, in basic form, would “would immediately provide a U.S. Debit Card pre-loaded with $2000 to every person in America. Each card would be recharged with $1,000 monthly until one year after the end of the Coronavirus crisis,” according to a copy of the legislation.
The funds would be distributed in the following way:
a. The pre-paid cards would be distributed as U.S. Debit Cards and would be administered by the U.S. Treasury’s Bureau of the Fiscal Service.
b. These pre-paid digital cash cards could be used to withdraw physical currency at regular ATMs or FDIC-insured banks or credit unions or make payments at Point-of-Sale terminals, as well as online. In addition, these cards could be topped-up with additional funds as needed, during and after the crisis.
c. All cardholder and interchange fees associated with use of distributed cards would be waived for the duration of the Coronavirus crisis.
d. The program would establish a common database of recipients identified by name and/or, where available, Employer Identification Numbers (EINs). Identifying information would not be shared with any other federal, state, or local agency…
One of the more interesting aspects of the proposed quick-fix law is the price-tag for the massive expenditure: it’s actually deficit-neutral.
“This Automatic BOOST to Communities Act would be a money-financed fiscal program for which no additional U.S. debt would be issued,” Tlaib’s novel piece of legislation notes. “Instead, the program would be funded directly from the Treasury, using its legal authority to create money via coin seigniorage, which is a statutory delegation of Congress’s constitutional power of the purse.”
Here are the mechanics of how the plan would pay for itself:
• The Treasury Secretary would direct the U.S. Mint to issue two $1 trillion platinum coins, under the legal authority provided by 31 U.S.C. § 5112(k).
• Congress would direct the Federal Reserve to purchase the newly issued coins at full face value.
• The Federal Reserve would complete the purchase by crediting the U.S. Mint’s account at the Fed with $2 trillion in reserves.
• The Fed would retain ownership over the two $1 trillion coins permanently in order to ensure its own balance sheet remains fully capitalized by the Treasury.
• The Treasury Secretary would“sweep” the newly created reserve funds from the Mint’s account into the regular Treasury General Account.
• The Treasury would make the funds available to the Bureau of the Fiscal Service to disperse to every person in America in the form of pre-paid U.S. Debit Cards.
Tlaib’s proposal was instantly praised by advocates of cash stimulus both for its thoroughness in providing stimulus payments to Americans amidst the nation’s worst economic crisis since the Great Depression and for its ingenuity in raising the funds.
“This is the kind of break-the-glass thinking we need to address the scale of the crisis,” tweeted enamored Bloomberg Business Editor Joe Weisenthal. “Hats off to [Rep. Tlaib] for thinking huge in terms of getting money into people’s hands, and not listening to the ‘but how will we pay for it’ crowd. Let’s [Mint the F**king Coin] already.”
Weisenthal’s fulsome posts praising the idea resulted in the hashtag “#MTFC” to trend on Twitter Saturday afternoon.
The economics guru explained the variegated meaning of the acronym in a later tweet heralding Tlaib’s plan:
As i was saying earlier this week https://t.co/vHQX0579Xe
— Joe Weisenthal (@TheStalwart) March 21, 2020
“It’s time for outside the box thinking, like minting the coins,” tweeted Indianapolis-based Accounting and Finance Professor Scott Hoyer. “Everyone needs the money. Everyone. #MTFC.”
The idea of minting such coins is legally sound and has been tossed around–and repeatedly tossed aside–for decades in Washington, D.C. Economists affiliated with the historically vindicated Keynesian economic school and other left-leaning economics schools have long supported the idea.
As the economy prepares for something akin to all-but total collapse and a slate initial jobless claims never before seen in U.S. history, many now believe that all bets are off when it comes to the possibilities likely to be considered and enacted in response.
“This is good as policy, but it’s also savvy because Trump might be into it for the trillion-dollar coins,” tweeted journalist David Roth. “It is very easy to imagine him posing with them doing his big boy smile and saying ‘beautiful coins’ as photographers’ cameras whirr [sic].”
There was some criticism of the plan:
This has to be a joke. Trillion dollar coins?
— Tom Nichols (@RadioFreeTom) March 21, 2020
But those familiar with history and economics quickly pointed to the precedent and theory:
This has to be a joke. Keynesian economics? https://t.co/TCshjiVL9i
— David Klion (@DavidKlion) March 21, 2020
“Money is a construct, but people’s suffering is as real as it gets,” tweeted Aya Ibrahim, a legislative assistant for Rep. Ayanna Pressley (D-Mass.), a well-known ally of Tlaib’s in Congress.
[image via Chip Somodevilla/Getty Images]
Editor’s note: this article has been amended post-publication to include criticism of Rep. Tlaib’s plan.