If certain lawmakers have their way, soon there will be fewer dollar bills in your wallet and more coins in your pocket. After years of talk, dollar-coin supporters and some economists say the time has come to replace the $1 bill with a copper coin.
Among those backing the introduction of a dollar coin are Sen. Tom Harkin, D-Iowa, and Rep. David Schweikert, R-Ariz., both of whom introduced bills in Congress earlier this year to improve the circulation of the dollar coin through education efforts and the collection of obsolete coins. Arizona and Iowa would benefit from the fiscal injection brought about by copper-coin production.
To supporters of the dollar coin, the concern over the economy will make any cost-cutting strategies – such as the switch to the dollar coin – more appealing, said John Caskey, a professor of economics at Swarthmore College.
“The people who back this look and say the United States has a budget problem, so if we’re ever going to get traction on this issue, then let’s do it now,” he said.
But despite recent efforts, the dollar-coin proposal faces significant obstacles. Switching to coins would be a hassle for businesses, and the American public hasn’t embraced the coins in the past. In addition, the Treasury Department decided just last year to halt the production of a series of presidential dollar coins.
"Given the substantial, growing inventory of $1 coins, it is clear that the minting of hundreds of millions of additional $1 coins over the next several years is not necessary and is not an effective use of taxpayer dollars," Deputy Treasury Secretary Neal S. Wolin said in making the 2011 announcement.
This isn’t the first time that advocates have fought it out over the dollar coin. But given the nation’s fiscal woes, dollar-coin proponents say that this year could be different. Paper manufacturers and copper companies are spending more than they did last year in their lobbying efforts on the issue, according to lobbying disclosure reports.
Dollar-coin advocates say coins are more convenient for consumers who make lots of small transactions, such as at vending machines or on public buses.
Retailers, on the other hand, say replacing the dollar bill completely would carry a high transition cost. They’d have to adapt cash registers, change money-transportation procedures and reprogram coin dispensers, said Jeff Lenard, a spokesman for the National Association of Convenience Stores.
Unlike many other countries, the United States has been hesitant to replace low-denomination bills with coins.
The Susan B. Anthony dollar, adopted in 1979, was such a failure that the government had to store thousands of them in salt mines because the public didn’t spend them, Caskey said.
Other efforts also met with limited success. When the Treasury halted production of the presidential dollar coins in 2011 after four years, Vice President Joe Biden said it was because “nobody wants to use them.”
The Government Accountability Office, Congress’ investigative arm, estimated last year that taxpayers would save $5.5 billion over 30 years by making the change to a dollar coin.
The dollar coin costs 15 cents to produce and lasts 30 years; the dollar bill costs about 3 cents to produce and lasts 4.7 years, the GAO’s Lorelei St. James said.
Given the nation’s $16 trillion budget deficit, the dollar coin is a “smart investment for our country,” Harkin said.
Even so, Caskey said the estimated savings were too small to have any real impact on the deficit in the long term.
The dollar coin is a good investment for Iowa, which is home to PMX Industries Inc., the company that’s responsible for making the sheets of metal used to produce copper coins. Harkin’s communications director, Kate Cyrul Frischmann, said it was the financial benefit to the country that attracted the senator to the issue, and that Harkin had co-sponsored legislation calling for a study into the dollar coin before PMX set up shop in Iowa.
In addition, Arizona produces roughly 60 percent of U.S. copper. Schweikert’s communication director, Rachel Semmel, said that wasn’t a factor in his decision to sponsor the bill.
The Dollar Coin Alliance spent $410,000 in the first half of this year to lobby for the coin; at the same point last year, it had spent $300,000, according to lobbying disclosure reports.
Paper manufacturer Crane & Co. has paid $120,000 toward lobbying against the introduction of a dollar coin; in 2011 it didn’t spend anything on lobbying. Doug Crane, the company’s vice president, said Crane didn’t plan to lobby further on the issue.
Sen. Scott Brown, a Republican from Crane’s home state of Massachusetts, said in a statement that, “Even with the dollar coin already available, Americans still overwhelmingly choose to use the dollar bill.” Eliminating the dollar bill is “the wrong thing for the American taxpayer and would cost Massachusetts hundreds of jobs,” he said.
The issue has been elevated to a higher level this year, said Tom Schatz, the president of Citizens Against Government Waste, a nonpartisan, nonprofit organization that monitors federal spending.
“This is the first Congress in many, many years that has even had legislation introduced,” he added.
To some, the transition is unavoidable.
“In my view this is something that inevitably will happen,” said Jim Kolbe, a former Republican congressman from Arizona who’s the honorary chairman of the Dollar Coin Alliance.
Even so, the legislation has made little progress in this election year. The bills await committee hearings.
But is it all too little, too late? As Caskey pointed out, consumers are starting to use credit cards more often.
He added that the public won’t want to make the change to coins without being told of the savings the U.S. economy would gain.
The only way to make it happen is to take dollar bills out of circulation, Caskey and Kolbe said.
“You’ve got to force people to make the transition,” Caskey said.
That’s what countries such as Canada and the United Kingdom did when they made the transition, and Harkin said that’s what the U.S. should do if it were serious about changing to coins.
“If you look at other modern economies around the world that have phased out some paper bills, you see that people quickly adjusted to the switch,” he said.