Doing away with $1 bills will save the government–and small business–money, at least according to Congress.
Senators Tom Harkin (D-Iowa) and John McCain (R-Ariz) recently introduced the Currency Optimization, Innovation and National Savings (COINS) Act. It's a companion item to the House bill introduced this fall by Rep. David Schweikert (R-Ariz.)
The COINS Act would promote a $1 coin and phase out all one dollar bills over four years. Swapping a $1 bill for a coin could save the government $184 million annually, which would add up to some $5.5 billion over 30 years, says research by the nonpartisan Government Accountability Office.
Tony Buckholz, the president of the Tri-State Automatic Merchandising Council (Pennsylvania, New Jersey, and Delaware), a vending machine industry group, told the Dollar Coin Alliance: Every time a bill jams up one of our vending machines that is one more dollar down the drain. The dollar coin is good for the taxpayer and good for small business owners like myself. We all win.”
One potential problem: It's not a money-saver if no one uses the coins.
The federal government currently has $1.4 billion unwanted and unused dollar coins. In December, the Treasury Department ordered a suspension of the production of the coins, which cost 32 cents apiece to make – and of which there are so many unused that the Federal Reserve has told Congress it will need to spend $650,000 building an extra vault in Texas to store them, ABC News reported. Shipping the coins to the new secure facility will cost an additional $3 million.
It costs 32 cents to make each coin versus 9.6 cents to produce a dollar – but the coins' life cycle is much longer. Plus, the price of making a dollar jumped 50 percent in 2010 versus 2008, thanks to the rising price of cotton, and it could continue to climb.
“Minting $1 coins that ultimately end up sitting in Federal Reserve Bank vaults – and serve no useful purpose for businesses, financial institutions and consumers – is simply not a prudent use of taxpayer resources,” Treasury Secretary Neal Wolin said in a statement.
The Presidential $1 Coin Act, passed by Congress in 2005, ordered the mint to make millions of coins honoring every dead president. So far it's done George Washington to James Garfield. It was scheduled to continue to 2016, though if it produced the coins at previous rates, there would be an inventory of 2 billion unused coins.
Not even Sen. Jack Reed (D-R.I.), one of the co-sponsors of the 2005 act, uses the dollar coins.
Reed told ABC: “I don’t I tell you, but I like everyone else repeatedly use nickels, dimes, quarters. In fact I have a little jar in my car for the traffic meters.”
Collectors clamoring–and there are collectors clamoring–for the President Chester Arthur $1 coin, which would be the next one in the series, will get their fix in the spring. The coin will be released then, but the government will make just enough to fill pre-orders.
Where do you stand on the $1 coin versus $1 bill debate?