Dollars and common sense
In December 2011, long before President Obama’s infamous January 2014 claim that he would use pen and phone to implement policy changes, his Treasury secretary unilaterally suspended production of the presidential dollar coin. The immediate effect of that decision was to rob the U.S. Mint of its best source of income and perpetuate America’s status as the only major industrialized country with such a low-value paper currency.
While the administration claimed that its intent was to save taxpayers money, that explanation doesn’t hold water upon closer examination. Canada, the European Union, Japan and other nations that long ago switched to lower denomination coins have experienced substantial cost savings and received no objections from the public. After Canada achieved savings from the $1 coin that were nearly 10 times the initial estimates, the country minted a $2 coin.
{mosads}The Government Accountability Office (GAO) has recommended on 10 separate occasions that the U.S. should transition from the $1 note to the $1 coin. In its most recent report, released in October 2013, the GAO stated that switching to the $1 coin would save taxpayers $4.4 billion over 30 years.
Many private-sector businesses have already benefited from $1 coins. Mass transit agencies have found that processing $1 coins costs 83 percent less than processing $1 bills. In addition, vending machine operators have determined that $1 coins save their industry $1 billion a year. Other benefits include savings on the processing of money by banks and businesses. Coins cost 30 cents per thousand pieces to process at Federal Reserve Banks, compared to 75 cents per thousand for $1 notes. The dollar coin has a lifespan of 35 years or more, while dollar notes last between two to four years. Finally, coins are much more difficult to counterfeit.
The arguments against the $1 coin, therefore, are not about saving money. They are about sentiment, nostalgia and stubbornness. A January 2011 poll conducted by the Tarrance Group and Hart Research found that, when informed of the potential cost savings, 65 percent of Americans support replacing the $1 bill with the $1 coin. Any deficit-reduction measure on which nearly two-thirds of Americans agree might even convince a fractured Congress that it is a good idea.
Even if Congress does nothing else before the end of the year, the House should at least consider the patriotically named USA Act, sponsored by Reps. Mike Coffman (R-Colo.) and Kyrsten Sinema (D-Ariz.). The USA Act, which would save at least $193 billion over 10 years, includes phasing out the $1 bill and transitioning to the $1 coin.
The sooner the switch to the $1 coin is made, the sooner the nation will start accumulating billions of dollars in savings and catch up with the currency policies of our trading partners. At a time when the national debt exceeds $17.7 trillion, Congress can ill afford to wait much longer.
Schatz is president of Citizens Against Government Waste.