Instead of saving money, dollar coin legislation will end up being more costly
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Recently in The Hill, we heard former Reps. Jim Kolbe (R-Ariz.) and Tim Penny (D-Minn.) promote currency reforms as a way to save taxpayers money. Unfortunately, their proposed solution, The Currency Optimization, Innovation, and National Savings (COINS) Act of 2017,  misses the mark completely and would move the country in exactly the wrong direction. 

There is no argument that countries around the world are concerned about the cost of producing quality circulation coins, especially when the cost to produce their coins approaches or exceeds the face value of the coin. At the direction of Congress, the Mint is currently exploring options to make our circulating coins less expensive.

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But the $1 Coin "solution" proposed by The COINS Act simply recycles an old and failed approach. Even if you ignored the public rejection of the past three attempts to circulate a $1 Coin (Susan B. Anthony, Sacagawea, Presidential Dollar Coin), the fact remains that unused dollar coins quietly piled up in Federal Reserve vaults from 2007 until the end of 2011 when Treasury Secretary Tim Geithner announced the minting of Presidential $1 Coins would be suspended. Government storage of over $1 billion in dollar coins nobody wants hardly seems like a budget saving tool.  

The current legislative effort, however, demonstrates one of the oldest axioms in politics.  All politics is local.

Sen. John McCainJohn Sidney McCainMeghan McCain calls Russian attacks against her father the 'highest compliment' to her family Arizona Dems hope higher Latino turnout will help turn the state blue McConnell: GOP could try to repeal ObamaCare again after midterms MORE (R-Ariz.) reintroduced The COINS Act as S. 759 this year to 1) replace $1 notes with the $1 coin and 2) change the composition of the five cent coin to 80 percent copper. Like Kolbe and Penny, McCain touts the initiative as a way to save taxpayers money. Variations of this legislative proposal have been introduced for a long time, the first in 1991 by then-Rep. Jim Kolbe. There are three glaring problems with this approach.

First, McCain seeks to lock in Mint production of high cost metals. The dollar coin is comprised of 88.5 percent copper; the nickel is comprised of 75 percent copper. The Mint should not be limited to one composition option that could miss the desired savings, or worse, cost taxpayers more money than lower cost alternatives.

Second, and related to the point above, copper and nickel are the two highest cost metals in our circulating coins. The high cost of our current coins is one reason the Mint has been looking at less expensive alternatives like zinc and steel. A 2012 Navigant Consulting study found the Mint could save $200 million per year by shifting to steel-based coins like several other countries.    

Third, and to state the obvious, McCain is trying to help local Arizona copper interests as Kolbe did 25 years ago. Arizona has been a major copper producer since the 19th century and 12 active copper mines in the state directly employ nearly 10,000 workers. Elimination of the $1 note will lead to greater dollar coin production (at 88.5 percent copper composition). To try to wrap that effort in a message of saving money for the American taxpayer is the height of hypocrisy. This is special interest legislation at its worst.

Finally, The Coins Act would also eliminate the penny. The Mint says penny elimination will likely double nickel production (which the McCain legislation would increase to 80 percent copper). Americans need to understand that they won’t save money if the penny is eliminated. The Mint will lose money making more nickels. Moreover, the alternative to the penny, rounding transactions to the 5-cent coin, is bad for consumers and our economy.

Locking the Mint into higher cost metals is the last thing anyone should consider if we want to save taxpayer money. We should let the debate about our future coins be driven by a thorough examination of alternative metal compositions for our coins. Bad information can lead to policy changes that cost more money and do the exact opposite of what is intended.

Mark Weller is Executive Director of Americans for Common Cents, a coalition of business and charitable organizations dedicated to keeping the penny.


The views expressed by this author are their own and are not the views of The Hill.