It’s no small change, scrapping the U.S. dollar bill, yet it could be a big money-saver.
A bipartisan group of senators is trying to cash in on projections from the Government Accountability Office. In 1990, the agency said replacing the $1 bill with a $1 coin would save the U.S. $318 million annually. In 2011, it said $184 million could be saved. In 2012, the estimate was $146 million.
“If you look at what’s happened in the rest of the world, they’ve figured this out -- a coin is just a common-sense change that we need to make,” former Representative Jim Kolbe, an Arizona Republican, said in an interview.
Kolbe is a co-chairman of the Dollar Coin Alliance, a group of trade associations and budget watchdogs lobbying for legislation to retire the $1 bill. Members include the National Mining Association and the National Bulk Vendors Association.
Senators Tom Harkin, an Iowa Democrat, John McCain, an Arizona Republican, Mike Enzi, a Wyoming Republican, Tom Coburn, an Oklahoma Republican, and Mark Udall, a Colorado Democrat, yesterday filed a bill: The COINS Act (for Currency Optimization, Innovation and National Savings.)
It would halt the printing of $1 bills four years after the law’s passage, or the first year in which 600 million $1 coins are circulated, whichever comes first. A similar measure was introduced in the Senate in January 2011 and in the House in September 2011.
The GAO estimates that while the switch would cost the U.S. about $531 million over the first 10 years, it would save the government about $4.4 billion over 30 years due to seigniorage - - the difference between money’s face value and its production costs.
The GAO cites cost-saving transitions to coins in Canada and the U.K. in its recommendation for the switch: Canada saved $450 million between 1987 and 1991, the agency reports.
Opponents contend the switch would actually cost the government a pretty penny because Americans prefer bills to coins. The Federal Reserve Bank had about 1.4 billion $1 coins in its inventory in 2012.
Dollar coins haven’t fared well.
The White House announced the suspension of presidential $1 coin production in 2011, citing a lack of demand, estimating it would save $50 million annually.
“After many failed efforts to make $1 coins more appealing to consumers and the clear costs that would be shifted to them from government, the notion of eliminating the dollar bill from circulation is really quite absurd,” former Office of Management and Budget Director James Miller told Congress last year.
Advocates say two-thirds of Americans support the transition when informed of the potential savings, citing a 2011 poll by Tarrance Group and Hart Research.
With “the previous experience of the Sacagawea coin and Susan B. Anthony coin, people see those as a dismal failure,” Kolbe said. “The key, the absolute key to making this work, is phasing out the paper dollar.”
Only time will tell if Americans are ready for the change.