Friday, October 28, 2011

Buck Should Stop Here—and Be Replaced With a Coin (October 28, 2011)

There’s a proposal in the works for our government to save some bucks  and, in the process, reduce the national debt by phasing out dollar bills and replace them with coins. The transition for paper currency to fade from circulation would take about four years, but, according to the Government Accounting Office (GAO), the switch would save billions.
In desperate times like these this may seem like a desperate, quick-fix that would hardly dent the federal debt compared to cutting costly government programs, yet eliminating greenbacks makes sense and  pardon the pun  would add a few cents, too. So far, however, the measure has only spurred inconsequential support, and, of course, pockets of opposition from special interests that would rather cling to crisp bills rather than shiny coins.
One of the major obstacles to any monetary switch would probably be Americans’ aversion to dollar coins. In fact, the banking industry reportedly returned thousands of dollar coins to the Federal Reserve last month because nobody wants them. Additionally, previous attempts to introduce a dollar coin — some are still in circulation — have failed miserably over the last few years. The GAO reports there is over one billion dollars in unused dollar coins sitting in a vault because of the public’s dislike.
But if a public that is accustomed to the paper bill understands it could help nudge the economy, doesn’t it make sense to proceed with the switch? If it was gradually phased out, the buck would stop here, there and everywhere and we’d be forced to use to dollar coin. As the dollar bill vanished, some would relentlessly grumble and complain, but, slowly but surely, they’d adapt to the subtle change.
The Joint Committee on Deficit Reduction — also called the super committee — estimated that replacing the paper dollar with a coin could save $5.6 billion over thirty years. While those savings aren’t much in the grand scheme of a trillion-dollar deficit, at this stage of our stalled economic picture, a dollar minted, instead of printed, is a dollar saved.
It costs less to print paper money than it does to mint coins, but the latter lasts longer. The average life span for most paper money is less than four years — actually 42 months according to one to report — while coins typically last more than seven times longer.  Therefore, the government would spend a lot less money replacing currency.
Coin advocates, however, want the government’s 12-member super committee, currently working on ways to pare the nation’s bloated budget by year’s end, to champion adoption of the coin. It would also annul the Federal Reserve’s request for an additional $3.6 million in funding to build a new vault in Texas to hold the unused dollar coins already minted.
Advocates of the dollar coin are also looking to reap benefits. Mining businesses would likely welcome the change, so politicians from states where mines operate to support such legislation. Vending machine companies also embrace the idea.
Another committee member, Rep. Jeb Hensarling of Texas, is a sponsor of the dollar coin proposal. Nevertheless, he called for eliminating the current Susan B. Anthony dollar, which may be the basis for rejecting dollar coins over the years since it caused too much confusion due to its similarity in weight and size to the quarter.
Committee member Senator John Kerry, along with fellow Bay State senator Scott Brown, oppose the dollar coin, not because it is a bad idea, but because it is politically expedient. The only company that has supplied currency paper since 1879 is — surprise, surprise — based in Massachusetts. Once again, politicians protecting private interests over what could be better for the country.
The armored car industry is also not too happy since the additional coinage would add weight to its cargo and also mean additional costs for fuel for its trucks.
Several years ago I supported getting rid of the penny since the government loses about $70 million minting 7 billion of them annually, but the idea never caught on. Now, however, as the dollar coin proposal emerges, it deserves a second chance.
Retiring the dollar bill is a small sacrifice that would almost certainly be received with resistance, but with the inflated deficit one of the major causes for the nation’s stalled economy, isn’t it better for the buck to stop here? The dollar coin is but a small, albeit practical and simple solution to take a bite out of the budget.

Tuesday, October 25, 2011

Here's My Two Cents for Counting Out the Penny (February 21, 2008)

The phrase "a penny for your thoughts" has little meaning these days, especially when inflation devalues the one-cent coin year after year.
  Like eight-track audio cassettes decades ago and the gradual elimination of the videocassette recorder in favor of its DVD or Blu-Ray equivalent, the penny could eventually vanish and become a cultural relic. Then, the coin would only be of interest to numismatists (There's a word I'd never thought I'd ever use in a column.) and penny hoarders. Some believe the latter group is squirreling them away more than ever these days since metal prices keep rising.
If the penny becomes extinct, the same fate would eventually devalue such maxims as "penny-wise and pound-foolish," "in for a penny, in for a pound," something costs "a pretty penny," "penny ante," "he doesn't have two pennies to rub together" or "a penny saved is a penny earned." And you'll certainly never hear anyone utter, "a bad penny always turns up" if the coin fades away.
Been to a Penny Arcade lately? Nothin's a penny  or a nickel or a dime - anymore and hasn't been for decades. But Quarter Arcade just doesn't have the same ring to it.
Do we really need the penny anymore? There's nothing you can buy with it. When I was growing up, you could at least get a piece of Bazooka bubble gum or stick of licorice for a cent. But, that was decades ago - in people years.
In 1943, at the height of World War II, copper was in demand for the war effort, so the cent coin was minted with zinc-coated steel. The following year it was made of brass  a mixture of mostly copper and zinc. That combination lasted until 1982 when it was minted with 97 percent zinc and a copper plating to maintain its traditional appearance. The cost of zinc has tripled in the last few years, so if the penny remains in circulation another change in metals might be looming.
It is estimated the government spends 1.67 cents for every one-cent coin it produces. In other words, for the last couple of years, the U.S. Mint has been spending more than they're worth. More than $115 million of our tax dollars is spent every year for new pennies. That averages out to more than $40 per person. Do you know what you can buy with 40 dollars? Actually, not much, but 40 bucks is 40 bucks.
Can anyone rationally explain why the government remains engaged in such an endeavor? Isn't it typical of our government to get bogged down in something that keeps losing money for no logical reason? Perhaps they simply don't want to admit it's a mistake and they're losing the Penny War.
According to the U.S. Mint Web site, there are more than 150 billion cent pieces currently in circulation (that's $1.5 billion). Someone figured that if all those pennies were stacked on top of each other they would rise about 1,000 miles. Last year, the U.S. Mint reported it produced well over eight BILLION pennies - more than any other coin minted.
Since producing pennies costs the government more money than they are worth, and despite the fact they are still in demand by retailers and banks, maybe it's time to start pinching pennies.
Nonetheless, there's little chance the one-cent coin will be out of circulation anytime soon. The U.S. Mint has grandiose plans to redesign the penny next year for Abe Lincoln's 200th birthday and the centennial of the Lincoln penny. By the way, Lincoln was the first president whose image was put on a U.S. coin.
Still, a few efforts to phase out the penny by Congress, most recently in 2006, have failed. However, the legislation in which that issue was incorporated, included the transfer of control of the Mint and the Bureau of Engraving and Printing from the Department of Treasury to the Federal Reserve.
Perhaps the biggest obstacle to eliminating the penny would be if businesses had to round off the cost of an item, mostly due to sales tax charges. Either they or the consumer would lose money on each transaction, depending on whether the total would be rounded up or down. So, before the penny is retired that issue, more than any other, would have to be resolved.
In a recent "60 Minutes" segment on this matter, a group called "Americans for Common Cents" figured that the rounding up or down would cost the economy about $600 million a year, which, they contend, would hurt those that can least afford it. "The ones that don't have checking accounts or charge cards."
"Freakonomics" author Stephen Dubner said in the same piece that Americans suffer from a love affair with the one-cent coin, which he calls "pennycitis." He said it would be "hard to get rid of something that has been ingrained" and has become a sentimental part of our society.
Sentiment, schmentiment, I unload my pennies as often as possible. The coin that's most needed these days is the quarter  for washing machines and parking meters. Pennies, nickels and dimes just take up space in my pocket!
Just a suggestion. Never ask me for a penny for MY thoughts. Mine  in all modesty  are worth at least a nickel!
Well, that's my two cents worth  for now.

Monday, October 24, 2011

Start of Aging Boomers’ Golden Years Are Tarnished (October 21, 2011)


Nine years ago, when I wrote a column on the aging boomer generation (Americans born between 1946 and 1964), the Golden Years and retirement were still several years away. But this year, the first crop of more than 75 million boomers  more than a quarter of America’s population  reached retirement age. And, for the immediate future, full retirement for those still employed may be years away, especially if the economy remains on a snail’s pace to recovery. Even then, the golden years may not start out as hopeful as anticipated.
Until recently, I pretty much ignored Social Security or Medicare news. However, now that it has or is about to affect some friends, my peers and me, I’ve been keeping an eye (or ear, depending on when I get the news) on the subjects.
For instance, when it was announced this week that Social Security recipients would receive a 3.5 percent cost-of-living increase, the first in three years, in 2012, my ears perked up.
Recently, I’ve also been more aware than in the past of the glut of television, radio and print advertising for Medicare supplement insurance. I’m also trying to comprehend the assortment of mail I've received regarding the best offer. At one point I was saving every bit of mail and if I stacked it, it would easily have been over a foot high, but I sorted through the clutter and disposed of redundant pieces. Yet, it is still about six inches tall. It’s utterly confusing, too; though not as complex as the nation’s intricate tax code.
As boomers start to flood the entitlement system, politicians earnestly debate the future of Social Security and Medicare. Nonetheless, with the anticipated escalating demands they place on the government’s future finances, the nation’s leaders should have confronted and dealt with the matter years ago. Sure, the dilemma got partially sidetracked after the 2001 terrorist attacks, when national security was more urgent than social security, but that’s no longer an excuse for the delay, nor for becoming an issue that intensified the rift in national politics.
Every day for the next two decades, it is estimated that 10,000 people will reach age 65, according to the Pew Research Center. Some, in fact, have been trying to preserve their youthful appearances; with methodical physical activities, with minor modifications, such as hair dying, and others through medical treatments or cosmetic enhancements.
Science has yet to discover a means to delay or stop aging, or the wear and tear on mind and body, no matter how physically active your lifestyle has been. Some body parts begin to sag and slide; metabolism slows down; muscles degrade; fat accumulates and shifts to places we wish it didn’t. Medical procedures may temporarily postpone some changes, but sooner or later, everything goes kaput. No one has yet developed a body shop to do for humans what it can do for automobiles.
On the other hand, research on aging is expanding. But with it comes good and bad news. Don’t think for one minute that while some companies may be altruistically developing treatments to help us live better and longer, others aren’t exploiting us with unproven remedies. Carefully read those anti-aging advertisements and you will see in very small print that the FDA, which is not always the definitive validation, has not certified the product’s merit. And think twice when you read a product’s tests results, which are often not independent and, more often than not, conducted to support their affirmative claims.
Surveys reveal that most boomers are content and prepared for happy, healthy golden years. But some are disappointed, as they enter the September of their years that their hopes, dreams and financial expectations have been tarnished by a struggling economy.
Sociologists long ago labeled us boomers, but let’s hope, as we age, life is not a bummer.