Will Congress Finally Eliminate The Dollar Bill?
Once again, there are proposals to eliminate the Dollar Bill. It's a good idea, which is why it's not likely to go anywhere.
Several times over the past couple decades, Congress has attempted to get Americans to use dollar coins. It started with the Susan B. Anthony Dollar in 1979 and ended most recently with the U.S. Mint’s decision to curtail production of a series of Dollar Coins bearing the likenesses of every U.S. President from Washington through Reagan. There are many reasons that each of these various efforts failed. In some cases, such as the Anthony Dollar, the coin was simply too similar to a Quarter. In others, such as the Sacagewea Dollar and the Presidential Dollar, it was simply that nobody wanted them because everyone was used to the Dollar Bill and Congress made no effort to eliminate that. Now, there’s talk that some in Congress may actually seek to end the Dollar Bill and replace it with coins:
WASHINGTON (AP) – American consumers have shown about as much appetite for the $1 coin as kids do their spinach. They may not know what’s best for them either. Congressional auditors say doing away with dollar bills entirely and replacing them with dollar coins could save taxpayers some $4.4 billion over the next 30 years.
Vending machine operators have long championed the use of $1 coins because they don’t jam the machines, cutting down on repair costs and lost sales. But most people don’t seem to like carrying them. In the past five years, the U.S. Mint has produced 2.4 billion Presidential $1 coins. Most are stored by the Federal Reserve, and production was suspended about a year ago.
The latest projection from the Government Accountability Office on the potential savings from switching to dollar coins entirely comes as lawmakers begin exploring new ways for the government to save money by changing the money itself.
The Mint is preparing a report for Congress showing how changes in the metal content of coins could save money.
The last time the government made major metallurgical changes in U.S. coins was nearly 50 years ago when Congress directed the Mint to remove silver from dimes and quarters and to reduce its content in half dollar coins. Now, Congress is looking at new changes in response to rising prices for copper and nickel.
At a House subcommittee hearing Thursday, the focus was on two approaches:
-Moving to less expensive combinations of metals like steel, aluminum and zinc.
-Gradually taking dollar bills out the economy and replacing them with coins.
The GAO’s Lorelei St. James told the House Financial Services panel it would take several years for the benefits of switching from paper bills to dollar coins to catch up with the cost of making the change. Equipment would have to be bought or overhauled and more coins would have to be produced upfront to replace bills as they are taken out of circulation.
But over the years, the savings would begin to accrue, she said, largely because a $1 coin could stay in circulation for 30 years while paper bills have to be replaced every four or five years on average.
“We continue to believe that replacing the note with a coin is likely to provide a financial benefit to the government,” said St. James, who added that such a change would work only if the note was completely eliminated and the public educated about the benefits of the switch.
As with various proposals to eliminate the penny and even the nickel, both of which now cost more to produce than they are actually worth, this is an idea that makes sense. The cost to produce a paper dollar seems unjustifiable in the face of the cost savings that would be obtained from switching to a coin, and it’s rather obvious that the main reason that previous dollar coin experiments have failed is because they did not include an effort to phase out the paper dollar. Interestingly, the reason for that isn’t necessarily because Congress was deliberately setting the dollar coin up to fail, but because power politics and cronyism intervened to essentially ensure that the experiment would be a failure. Specifically.the paper used by the mint to print currency is made by only one company, Crane & Co. of Massachusetts. When efforts were made in past years to tie the creation of a Dollar Coin to the elimination of the Dollar Bill, it has been strongly opposed, and ultimately blocked by the state’s Congressional delegation, including Senator John Kerry who last year introduced a bill to eliminate the Dollar Coin completely.
So, will the Dollar Coin argument succeed this time despite the fact that it has failed every other time? That depends on whether or not Congress gets around to getting rid of the Dollar Bill. And, if politics goes about the same as it has in the past that seems rather unlikely.