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Archive for Friday, November 30, 2012

Congress looks at doing away with the $1 bill

November 30, 2012

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— 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.

Even the $1 coin's most ardent supporters recognize that they haven't been popular. Philip Diehl, former director of the Mint, said there was a huge demand for the Sacagawea dollar coin when production began in 2001, but as time wore on, people stayed with what they knew best.

"We've never bitten the bullet to remove the $1 bill as every other Western economy has done," Diehl said. "If you did, it would have the same success the Canadians have had."

Beverly Lepine, chief operating officer of the Royal Canadian Mint, said her country loves its "Loonie," the nickname for the $1 coin that includes an image of a loon on the back. The switch went over so well that the country also went to a $2 coin called the "Toonie."

Rep. Bill Huizenga, R-Mich., affirmed that Canadians have embraced their dollar coins. "I don't know anyone who would go back to the $1 and $2 bills," he said.

That sentiment was not shared by some of his fellow subcommittee members when it comes to the U.S. version.

Rep. Lacy Clay, D-Mo., said men don't like carrying a bunch of coins around in their pocket or in their suits. And Rep. Carolyn Maloney, D-N.Y., said the $1 coins have proved too hard to distinguish from quarters.

"If the people don't want it and they don't want to use it," she said, "why in the world are we even talking about changing it?"

"It's really a matter of just getting used to it," said Diehl, the former Mint director.

Several lawmakers were more intrigued with the idea of using different metal combinations in producing coins.

Rep. Steve Stivers, R-Ohio, said a penny costs more than 2 cents to make and a nickel costs more than 11 cents to make. Moving to multiplated steel for coins would save the government nearly $200 million a year, he said.

The Mint's report, which is due in mid-December, will detail the results of nearly 18 months of work exploring a variety of new metal compositions and evaluating test coins for attributes as hardness, resistance to wear, availability of raw materials and costs.

Richard Peterson, the Mint's acting director, declined to give lawmakers a summary of what will be in the report, but he said "several promising alternatives" were found.

Comments

Blessed4x 1 year, 9 months ago

I love the dollar coins. If you get about 30 of them together it looks like you stole Blackbeard's treasure! Arrrrg, me matey!

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Blessed4x 1 year, 9 months ago

Wait! Will the strippers have to carry those little coin machines like the kid at Sonic?

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clovis_sangrail 1 year, 9 months ago

I love dollar coins. I go to the credit union every couple of weeks and buy two to four rolls and always carry them. It is my mission to circulate them.

And anyone who says they can't tell them from quarters is either blind of flat out dumb. Most of them are gold colored, except for those old Susan B. Anton dollars, so it shold be immediately obvious when you are looking at them. And they feel different. I can reach in my pocket and tell by the feel whether I have a dollar or a quarter.

I hate dollar bills because they just end up breeding in my wallet until there are dozens of them. I would much prefer getting dollar coins in change, but no one except the bank ever has them. (You used to get them as change from vending machines in the post office.)

I think we should get some two-dollar coins, too. A nice bi-metal coin like the Canadians have.

Finally, I have never understood why they put Susan B. Anton on the dollar coin. Susan B. Anton should have been on a bill. She was a great dancer and at 5'11'' very statuesque, and a bill would have shown off her long dancer's legs.

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Bill_Slu 1 year, 9 months ago

Where can I get a dollar bill breeding wallet? Or Is it how you position the bills (face to face) to get them to replicate?

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Ron Holzwarth 1 year, 9 months ago

Pay your tolls on the turnpike with them, it works for me!

Besides, it was their idea in the first place, I got a dollar coin or two in change from one of the automated toll booths at the Eudora interchange. Turnabout is fair play, and not a single toll collector has complained, but they always look at the dollar coins very closely.

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Briseis 1 year, 9 months ago

47,000,000 million people get EBT cards for food. Socially justify the rest of the populace by giving them EBT cards eliminating all need for coins or paper.

Eliminating coins and paper will save millions of trees and land from strip mining.

http://www.trivisonno.com/wp-content/uploads/Food-Stamps-Monthly2.jpg

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gr 1 year, 8 months ago

Force. Eliminate freedom. Complete tracking. Control.

It's the name of the game.

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average 1 year, 9 months ago

The US dollar coin is already the same size and color as the Canadian loonie. I've been with some very drunk Canadians, but none who ever, ever got their loonies and quarters mixed up.

Is Rep. Moloney saying that she's dumber than the average Canadian?

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classclown 1 year, 9 months ago

"It is my mission to circulate them."

Nerd.

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clovis_sangrail 1 year, 9 months ago

Sorry. I didn't realize I had to accommodate the hyperbole challenged.

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jafs 1 year, 9 months ago

We should eliminate pennies and probably nickels as well, since they both cost more than they're worth to make, and we're losing money on them all the time.

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gr 1 year, 8 months ago

"could save taxpayers some $4.4 billion over the next 30 years."

Why don't they do what the global warmers do and change their light bulbs for some real savings. Ha.

"Now, Congress is looking at new changes in response to rising prices for copper and nickel."

Problem: Coins cost a lot to make. Solution: Create even more coins. We could call it DollarCare.

" 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."

Translated: would work only if the note was completely eliminated and the public forced to make the switch. DollarCare2.

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Cant_have_it_both_ways 1 year, 8 months ago

I'll bet the private sector could continue making $1 bills and turn a profit.

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