Monday, November 7, 2011

David Schweikert in NY Times: Hoping to Save Money for the Government, Some Seek an End to the $1 Bill

SCOTTSDALE, Ariz. — It is not typical for a politician to admit using a coin to decide critical issues, but there was Representative David Schweikert, Republican of Arizona, fishing out a dollar coin from his pocket the other day.
“See this?” he said, opening his palm and revealing the coin, heads up.
Mr. Schweikert was not flipping the gold-hued presidential dollar coin, but was using it as a prop to promote his idea of doing away with the dollar bill to save the government money.
A recent study by the Government Accountability Office said the government could save about $5.5 billion over 30 years if it phased out dollar bills, which last about three years on average, and replaced them with dollar coins, which can circulate for three decades before they become worn out.
The projected savings have prompted some House Republicans, eager to pare government spending in these austere times, to champion a changeover. While doing away with the greenback has been debated for decades, many on both sides of the issue consider the odds, while still long, to be better than ever.
As a result, coin and bill backers have begun a lively back and forth over the merits of such a remaking of the country’s currency. They disagree on whether the coin would excessively weigh down consumers and complicate transactions for business owners. And they are far apart on whether the government would reap the cost savings that the accountability office predicts.
Mr. Schweikert, a former county treasurer who can be quite wonkish when it comes to financial matters, produced his dollar outside a jobs fair he was sponsoring last week for out-of-work constituents in this upscale community outside Phoenix. His point in showing it was that the dollar coin has evolved considerably in the three decades since the introduction of the silver-hued Susan B. Anthony dollar, which confused Americans because of its similarity in size and color to the quarter.
“It fits the mantra of why we got elected — to save money,” said Mr. Schweikert, whose effort is backed by the coin lobby, an assemblage of mining interests, operators of coin-operated devices and others that have formed a group called the Dollar Coin Alliance. His proposed legislation to make this happen is called the COIN Act (whose initials stand for Currency Optimization, Innovation and National Savings Act).
The changeover faces considerable opposition from those who do not want the dollar note to disappear. Calling themselves Americans for George, their members include the Mount Vernon Ladies’ Association as well bingo operators, foresters and Crane & Company, the Massachusetts papermaker that has provided the cotton stock used to make the country’s paper money for well over a century.
“Of course we have a particular business interest in keeping people employed in Massachusetts because this would be particularly damaging to us,” said George Crane, an eighth-generation papermaker. “But on so many levels, changing from paper doesn’t make sense.”
It is an emotional discussion. Paper backers imagine Americans wilting under the weight of dollar coins in their pockets and purses. “The world won’t come to an end,” Tom Ferguson, a dollar bill advocate who used to head the Bureau of Engraving and Printing, said of a changeover. “But Americans will be carrying around a lot more coins.”
The costs of converting cash registers and vending machines are also raised, as well as the higher transportation costs associated with coins. “It would be very cumbersome for the bartenders and the waiters who carry money around with them,” said Ken Cheuvront, a former Arizona state senator who now runs a restaurant and wine bar called Cheuvront in downtown Phoenix.
Their coin counterparts speak of the progressive people of Canada, Europe and Australia, who use coins for their base currencies without any fuss and who look down at the paper American dollar as something akin to the horse and buggy.
Adopting the dollar coin, coin advocates say, means no one will ever have to suffer the indignity of having worn bills rejected by vending machines. And as for the weight issue, they say that five dollar coins weigh 1.5 ounces, which is less than a Snickers bar or a box of Altoids and considerably less than an iPhone 4.
It is on the question of cost, though, that the two sides really go at it. The accountability office has been studying the issue going back 20 years, each time coming up with a varying cost savings.
The office says that it costs more to produce a coin than a bill and that it would take the government some years to begin to accrue net benefits.
The savings projected by the office come from the fact that coins and bills cost less than their face value to make, so the government gains value, known as seigniorage, with each one produced. But because coins tend to circulate less than bills, the office estimated that anywhere from 1.5 to 2 times as many coins would have to be produced to replace each bill, increasing the seigniorage.
However, the office said the Congressional Budget Office, which offers official estimates of the budget implications of legislative proposals, would most likely use a different analysis that would substantially lower the projected cost savings, if any, of doing away with dollar bills. On top of that, critics of the coin point out that the accountability office eliminated from its analysis the costs that businesses would face to accommodate the dollar coin.
The government has tried in the past to prod Americans into using the dollar coin, with modest success. The United States Mint, which produces coins, conducted public relations campaigns in four communities across the country in 2008 to try to increase public acceptance of dollar coins. Use increased modestly in Austin, Tex., Charlotte, N.C., and Grand Rapids, Mich., but actually declined in Portland, Ore. As it is, the Federal Reserve has about 1.1 billion dollar coins in storage because of limited public demand.
That is why those pushing for the full-scale introduction of the dollar coin say it is essential to eliminate the bill altogether and force Americans to make the change.
“It’s normal for people, who have so much stress in their lives, to say, ‘Don’t mess with my world,’ ” said David DuGoff, who runs a car wash outside Washington that accepts dollar coins and dispenses them as change. “But people need to get over their habit and learn that life will be easier with the coin.”

LA Times Editorial Board:Dollar coin? It's time

Washington Post Editorial Board: “Cutting a dollar a tough issue for Congress”

Chicago Tribune Editorial Board: “Hard Currency”

Chicago Sun Times: Occupy movement should think smaller”

The Seattle Times: “America should give up paper bills and embrace the dollar coin”

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