Senators Tom Harkin, D-Iowa, and John McCain, R-Ariz., are introducing legislation to replace the paper dollar bill with a coined version with the aim of cutting costs.

Printing fresh dollar bills costs money, although Americans tend to prefer the paper currency with the visage of George Washington over a coined version.

“Promoting the dollar coin is a smart investment for our country that saves taxpayer’s money,” says Harkin, according to the Wall Street Journal.

The Government Accountability Office has said replacing the $1 note with a $1 coin could save the government approximately $5.5 billion over 30 years.

“By moving from the costly dollar bill to the dollar coin, we can save real money and show the American taxpayer that we are serious about cutting spending in Washington,” McCain says.

The Senators’ Currency Optimization, Innovation and National Savings, or COINS Act, would phase out the paper dollar bill in four years.

Read more: Senators Move to End Minting of Dollar Bill

June 28, 2011

$1 Billion in $1 Coins That Nobody Wants

http://www.npr.org/2011/06/28/137394348/-1-billion-that-nobody-wants

John W. Poole/NPR Millions of dollars worth of $1 coins languish in a vault at the Federal Reserve Bank of Richmond’s Baltimore branch.

Politicians in Washington hardly let a few minutes go by without mentioning how broke the government is. So, it’s a little surprising that they’ve created a stash of more than $1 billion that almost no one wants.
Unused dollar coins have been quietly piling up in Federal Reserve vaults in breathtaking numbers, thanks to a government program that has required their production since 2007.

The pile of idle coins, which so far cost $300 million to manufacture, could double by the time the program ends in 2016, the Federal Reserve told Congress last year.

A joint inquiry by NPR’s Planet Money and Investigations teams found that the coins are the wasteful byproducts of a third, failed congressional effort to get Americans to use one-dollar coins in everyday commerce.
In 2005, Congress decided that a new series of dollar coins should be minted to engage the public. These coins would bear the likeness of every former president, starting with George Washington. There would be a new one every quarter. So, far, the Mint has produced coins through the 18th president, Ulysses S. Grant.

So, there are now about 1.2 billion dollar-coin “assets” chilling in Federal Reserve vaults, unloved and bearing no interest. By the time the presidential coin series finishes, and there are coins honoring all past presidents, there could be 2 billion.

Several congressional leaders contacted by NPR declined to comment for this story.

Still, it’s the program’s waste that hits home when you’re staring at millions of unused coins.

The Inner Sanctum

John W. Poole/NPR

The coin storage area of the Federal Reserve Bank of Richmond’s Baltimore branch, where unused $1 coins are piling up.

John W. Poole/NPR

The coin storage area of the Federal Reserve Bank of Richmond’s Baltimore branch, where unused $1 coins are piling up.

Inside one basementlike Federal Reserve vault in Baltimore, NPR was able to see 45 million $1 coins of various types. The coins were overflow from vaults elsewhere.
And despite a national indifference to the coins, they were heavily guarded.

Instead, the benefit to the government would come only from the profit it makes by manufacturing each coin for 30 cents and selling it to the public for a dollar.
When this profit, known as seigniorage, is factored out, switching to the dollar coin would actually cost taxpayers money over three decades, according to a Federal Reserve analysis of the GAO’s figures. The cost works out to $3.4 billion.

So, in other words, a tax? The profit to the government predicted by the GAO assumes that the government would have to issue 1.5 dollar coins for every dollar bill removed from circulation. That’s because people handle coins differently than they do bills.