House Republicans have introduced legislation to retire the dollar bill and replace it with a mandated dollar coin.
A pair of senators, however, have introduced a competing measure to protect the paper dollar from, as they call it, the “unpopular $1 coin.”
Schweikert said 3 billion paper dollars are shredded every year, and the constant need to destroy these dollars and create new ones is a cost the government can no longer bear. He said metal coins would last longer and therefore save money.
“At a time when we are staring down a record-breaking $1.3 trillion deficit, any common-sense measure that cuts billions needs to be given serious consideration,” he said of his Currency Optimization, Innovation and National Savings (COINS) Act. “That is exactly what the COINS Act will do and why I am introducing it.”
But Massachusetts Sens. Scott Brown (R) and John Kerry (D) introduced a competing bill over the weekend, the Currency Efficiency Act. That bill is aimed at protecting the paper dollar from what the senators call a “massive overproduction” of the “unpopular $1 coin.”
“The $1 coin is misleading because it costs taxpayers so much more,” Brown said. “In fact, we have over $1 billion worth of extra $1 coins sitting idle in vaults, and that’s set to double over the next several years.”
The Brown-Kerry bill would prevent the minting of $1 coins when a surplus of them exists. The two senators argue that $1.2 billion worth of $1 dollar coins are sitting in the Federal Reserve’s vaults, not in circulation, which is adding to the Fed’s storage costs.
The Dollar Coin Alliance, which favors the House bill, said the two Massachusetts senators have a specific reason for wanting to protect the dollar bill, arguing that the Senate bill is aimed at protecting Massachusetts-based Crane & Co., the sole-source supplier of paper used to produce dollar bills.
“Unfortunately, it seems the senators have chosen to protect a local business at the expense of the American taxpayer,” said Jim Kolbe, honorary chairman of the alliance and a former GOP congressman from Arizona. “At a time when the government needs to be looking to save every dollar, we can’t continue to play the same Washington game of serving narrow special interests with half-measure legislation.”
The mood to do away with the paper dollar seems to strike some members of Congress every few years, and is often timed with the release of a Government Accountability Office (GAO) report on the amount that could be saved if the United States went to a paperless dollar. GAO’s latest report was released in March, and reaffirmed that the federal government would save $5.5 billion over 30 years if the paper dollar were scrapped.
The GAO admits, however, that the government would be hit by a net loss over the first four years due to minting costs, but then realize a benefit after that. GAO also lowered its average annual savings to $184 million, from the $522 million in its 2000 estimate. This reduction is due in part to the longer lifespan of the paper dollar.
Still, the GAO said savings would be found, highlighting the success other countries have had in making the transition successfully.
In the United States today, the $1 coin is often associated with the change received when buying stamps at a post office or paying for parking in an automated garage. But supporters of the bill and even the GAO argue that public acceptance of the coin will come once there is no other choice but to use it.
A poll conducted this year for the Dollar Coin Alliance showed 65 percent of Americans favored the move to a coin, and that more supported it once they realized the savings associated with the switch.
“Other countries that have replaced a low-denomination note with a coin, such as Canada and the United Kingdom, stopped producing the note,” the GAO said in March. “Officials from both countries told GAO that this step was essential to the success of their transition and that, with no alternative to the note, public resistance dissipated within a few years.”
While there were no signs of movement on either bill this week, supporters of the House bill are optimistic that the COINS Act could move, particularly given Hensarling’s support for it. The supercommittee on which he serves is charged with finding $1.5 trillion worth of deficit savings over the next decade.
“They’re going to be looking for everything they can find,” Kolbe said of the supercommittee. “If they can throw in another $5 billion, let’s go.”
This story was posted at 1:13 p.m. and updated at 7:57 p.m.