Proposal by the congressional supercommittee would eliminate the dollar bill from circulation
Savings on the dollar?
November 17, 2011 5:00 AM
By Tim Grant Pittsburgh Post-Gazette
The almighty dollar could be knocked off its throne by a mere coin, if some members of Congress have their way.
One of the proposals the congressional supercommittee is considering to cut federal spending and decrease the national debt would eliminate the paper dollar bill from circulation and replace it with dollar-denominated coins.
At a time when the nation faces a $14 trillion deficit and every dollar counts, the U.S. Government Accountability Office estimates that replacing the $1 note with the $1 coin could save taxpayers $5.5 billion over the next 30 years.
But Americans have a strong affinity for the iconic dollar bill, and old habits die hard.
"The public has always had a choice of which form of dollar to use, and they have overwhelmingly chosen the paper dollar," said Tom Ferguson, a spokesman for the group Americans for George, which represents a group of associations, individuals, nonprofits, and small and large businesses who support the paper dollar.
Mr. Ferguson is a retired former employee at the U.S. Bureau of Engraving and Printing who now lives in Louisville, Ky.
Congress has for decades been trying to get Americans to adopt dollar coins for everyday purchases since the Susan B. Anthony and Sacagawea dollar coins were introduced in 1979 and 2000, respectively. The presidential dollar coin series honoring individual U.S. presidents was launched in 2007, but so far about $1 billion of those coins are languishing in Federal Reserve vaults because nobody wants them.
Lorelei St. James, a director for the GAO's infrastructure team in Dallas, said there are several bills before Congress supporting both dollar paper and dollar coins.
"Congress must consider all of them," Ms. St. James said. "Our role is to provide Congress with estimates based on the economic model we used to look at replacing the dollar note with the dollar coin."
She said the GAO first began looking at this issue in the 1990s. The $5.5 billion in savings by switching to a dollar coin is based on several factors, including a longer life span than the paper dollar.
"What we have found over the years is there are costs and benefits on both sides of the debate," Ms. St. James said. "We've pointed out there are savings. But it's really up to Congress to determine if this takes place."
Mr. Ferguson said a major flaw of the GAO report is that it looks at the dollar coin's cost savings to the government, but fails to consider the costs to society and to businesses.
While the government stands to save an estimated $184 million a year by switching to dollar coins, the annual cost to businesses would top $201 million, Mr. Ferguson said.
He said additional costs to businesses would stem from "higher banking charges and operational costs from processing the bulky and inconvenient coins." Higher costs also would result from capital expenses related to buying new cash registers, change counting machines, cash drawers and safes.
The analysis done by John Dunham & Associates on behalf of Americans for George does not include the cost to banks, money transfer companies or other financial firms.
Pennsylvania businesses also would be affected by these increased costs.
John Dunham & Associates, a New York-based economic research firm specializing in government issues, estimated a switch to dollar coins from bills would cost businesses in Pennsylvania as much as $7.8 million a year in increased banking and operational costs. In fact, the study shows a move to dollar coins would cause an annual loss of about $19.35 million in business activity in the state.
Pennsylvania Sen. Pat Toomey is a member of the congressional debt reduction supercommittee and author of the Republican plan to trim the nation's budget deficit.
Some industries would be more impacted than others by a move to dollar coins, including exotic dancers.
On StripperWeb -- a website devoted to topics related to dancers -- one dancer wrote: "Ouch! I can just see some poor girl getting hit in the face with a fistful of coins."
Americans for George claims 77 percent of Americans believe the dollar bill is more convenient than the coin and 86 percent say it's more widely accepted.
"There are people who want to use the dollar coins and they can," Mr. Ferguson said. "But the percentage is small."