Last week the CBO estimated the nation’s deficit would hit 1.34 trillion this year.
It’s a hard number to swallow, but what if you could help shrink it without your tax rate or cost of living being affected? Switch to one-dollar coins instead of bills.
Our neighbors to the north are already doing this, and an eclectic group of domestic organizations already support the idea including, Treasury, the National Bulk Vendors Association, and Citizens Against Public Waste.
The argument for coins is simple: they last longer than paper money, a lot longer.
According to an estimate by the Government Accountability Office, the U.S. Mint would save more than half a billion dollars per year if it didn’t have to collect, shred, re-print, and distribute paper $1 bills.
David Williams, vice president of policy at Citizens Against Public Waste, says, “The beauty of it is [this idea] doesn’t threaten any politician’s pet project.”
He adds that since “the government is already producing $1 coins, there aren’t a lot of start-up costs.”
Although it hasn’t publicly jumped on the bandwagon, according to Williams, the banking industry also likes the idea. “Banks prefer coins because they’re easier to count.” Coins eliminate the chance of undercounting because there’s no tacky paper that can potentially get stuck together. “We’ve fought for many years to get a $1 coin,” says a spokesperson for the National Bulk Vendors Association.
NBVA represents businesses that sell items through machines that operate mechanically, as opposed to electrically- about 1% of the vending industry.
Canada introduced its $1 dollar coin in 1987, phasing out paper Canadian dollars over the ensuing two years. “Loonies,” as they’re called, get their name from the image of the common loon embossed on one side. In the mid-1990s the Canadian government replaced the paper $2 bill with a coin that, despite the polar bear embossed on the metal, is, for obvious reasons, referred to as a “Toonie.”
Canadians were quick to adopt both coins because they had no choice: The government pulled paper money from circulation. But the same approach has never been used in the U.S.and Americans have been reluctant to warm up to dollar coins.
Congress passed the Presidential $1 Coin Act of 2005 based on the fact that “there are sectors of the United States economy, including public transportation, parking meters, and vending machines, in which the use of a $1 coin is both useful and desirable for keeping costs and prices down,” the law states.
Two years later, after testing the waters with a George Washington and a John Adams $1 coin, the Federal Reserve reported that “experience suggests that demand for the $1 coin increases only temporarily, and then returns to historically low levels after an introductory period….[T]here is no evidence to date that the public’s interest in the presidential $1 coins for transactions has materially increased, or that its preference for the $1 note has diminished.”
Despite public reluctance, if Congress wants an easy way to cut $500 million a year from the federal budget, replacing the $1 bill with a $1 coin seems like a no-brainer. Unfortunately, there’s no guarantee the money would not be wasted elsewhere.
“There’s always that reality,” admits Williams. “The public might be more willing to embrace [a $1 coin] if they really believed politicians would not simply find a way to spend the savings.”