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.