Will the U.S. Mint create two $1 trillion platinum coins in order to bailout Main Street America?
Congresswoman Rashida Tlaib (MI-13) has proposed the “Automatic BOOST to Communities Act” in response to the Coronavirus crisis. The Act would provide a U.S. Debit Card preloaded with $2,000 to every person in America. Each card would be recharged with $1,000 monthly until one year after the end of the coronavirus crisis.
The Act would be a money-financed fiscal program for which no additional U.S. debt would be issued. The program would be funded directly by the Treasury with its legal authority to create money via coin seigniorage, a statutory delegation of Congress’s constitutional power of the purse.
“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),” reads the Act. “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,” reads the Act. “The Treasury Secretary would ‘sweep’ the newly created reserve funds from the Mint’s account into the regular Treasury General Account.”
It adds: “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.”
One goal of the act is to “preserve the historical separation between fiscal and monetary policy and avoid financial entanglement between the Treasury and the Federal Reserve which would eventually undermine the independence of the Fed.”
A family of four would receive 4 x $2,000 cards, so $8,000 in total. Non-citizens would also receiv the cards, including undocumented people, permanent residents, and temporary visitors whose stay exceeds three months, as well as those without bank accounts, social security numbers or permanent addresses. Those living in unincorporated territories and protectorates and Americans living abroad, as well.
The U.S. Treasury would develop its list of eligible individuals in coordination with the Internal Revenue Service, the Social Security Administration, the Federal Election Commission and every other relevant federal, state, and local government agency, including DMVs.
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. Such pre-paid cards would be eligible for use to withdraw physical currency at regular ATMs or FDIC-insured banks or credit unions or make payments at Point-of-sale terminals. Cardholders and interchange fees would be waved during the Coronavirus crisis.
The new debit card infrastructure created as a result of the Coronavirus should be “converted into a permanent, Treasury Administered digital public currency wallet system, to serve as a privacy-respecting ‘eCash’ complement to universal Fed Accounts and/or Postal Bank Accounts for All.”
It adds: “This proposal should be accompanied by progressive tax reform to ensure that emergency relief provisioning does not exacerbate income or wealth inequality in the long-term.”