By Paula Dwyer
As part of its campaign to cut waste, the Obama administration today said the U.S. Mint would stop making presidential dollar coins for circulation. About 1.4 billion surplus dollar coins -- enough to meet demand for more than a decade -- are piling up in Federal Reserve bank vaults due to lack of demand for the coins. The savings: $50 million a year in production and storage costs. That's pretty decent pocket change.
In 2005, Congress mandated that the U.S. Mint issue $1 coins with the likeness of every deceased president. But more than 40 percent of the coins have been returned to the Federal Reserve because nobody wants to use them.
Until today, the U.S. Mint was on pace to produce an additional 1.6 billion dollar coins through 2016. The administration is legally bound to continue making dollar coins, but now it will only produce what coin collectors order.
It sounds like a smart move, but it leaves one very unhappy constituency: the Dollar Coin Alliance. As Bloomberg News reported in March, the group had hoped to outlaw dollar bills and replace them with coins. The coalition includes car-wash owners and others who rely on vending machines that often reject paper bills; Brink's, the armored transport company that offers coin sorting and wrapping services, and mining companies, which would benefit from greater demand for metal.
The alliance points to a Government Accountability Office report from March that said issuing metal dollars instead of paper ones would save the government $5.5 billion over 30 years by earning revenue on the difference between the coins' production costs and their face value. That comes to $184 million a year -- almost four times as much as the savings from making fewer coins. But if the U.S. discontinued the $1 bill, the public outcry could make those savings seem immaterial.
(Paula Dwyer is a member of the Bloomberg View editorial board.)
-0- Dec/13/2011 21:27 GMT