WASHINGTON — Congressional auditors say doing away with dollar bills 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 Americans 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 money itself.
The Mint is preparing a report for Congress showing how changing the coins’ metal content 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 such as steel, aluminum and zinc.
Gradually taking dollar bills out of the economy and replacing them with coins.
The accountability office’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 was educated about the benefits of the switch.
Even the dollar coin’s most ardent supporters recognize that the currency hasn’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, which 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.”
But some U.S. lawmakers aren’t convinced.
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?”
Front Section, Pages 3 on 12/01/2012