WASHINGTON - So much for the $1 trillion platinum coin idea.
The U.S. Treasury Department said on Saturday it will not produce platinum coins as a way of generating $1 trillion in revenue and avoiding a battle in Congress over raising the U.S. debt ceiling.
The idea of creating $1 trillion by minting platinum coins has gained some currency among Democrats in recent days as a way of sidestepping congressional Republicans who are threatening to reject a necessary increase in the debt ceiling unless deep spending cuts are made.
The Treasury Department and the Federal Reserve, both independent of one another, each concluded this was 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.
Congress' refusal in 2011 to raise the debt ceiling unless the White House agreed to large spending cuts brought the United States close to the brink of a debt default and dealt the weak recovery a setback.
Another crisis is brewing as the United States is expected to reach its authorized debt limit of $16.4 trillion in February.
White House spokesman Jay Carney said that with the platinum coin question resolved, the pressure is on congressional Republicans now to act to raise 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 was also no change in Obama's opposition to another possible way to get around Congress that some Democrats support - that of invoking a line in the 14th amendment to the U.S. Constitution.
Part of the 14th amendment says the validity of the public debt should not be questioned, which some Democrats take to mean that the president can raise the debt ceiling on his own. The White House says it does not believe that approach would stand up legally.
"Congress needs to do its job," said Carney.
The idea behind the platinum coin was that Treasury would mint a coin or coins from the precious metal and that the value would be placed at $1 trillion.
For the plan to work, the Federal Reserve would have to deposit it in the Treasury account and credit the account $1 trillion that could be used to pay the nation's bills.
But if the Federal Reserve does not believe that the coin is worth $1 trillion and refuses to buy it, then the plan falls apart.
Some liberals, like New York Times columnist Paul Krugman, had supported the idea and a petition submitted to the White House website had thousands of signatures. This kind of momentum prompted both the Fed and the Obama administration to consider the concept, and they ultimately decided it would not work.