Using $1 to Reduce the $1.4 Trillion Deficit
Charlie Smith served in the Georgia House of Representatives from 1993-2003, and was the Administration Floor Leader for the last four years of his term in office. He is now an attorney practicing real estate, corporate and estate planning law in Brunswick. While he reached a leadership position when he served the people of Georgia as a legislator, and is rated highly as an attorney according to his peers, he may become best known for waging a battle to increase circulation of the $1 coin.
A May 17 article by Terry Dickson in the Augusta Chronicle noted that ”The St. Marys lawyer and former state representative is urging everyone he knows to stop using $1 bills and start using the $1 coin that has been in circulation since 2000. Smith estimates he has circulated 10,000 of the coins since he started his campaign this year. He drops them in the collection plate at church. He buys meals with the coins. He recently spent 300 of them at the Kentucky Derby. He even pays his water bill with them. Smith will encourage civic leaders to follow his example Monday when he speaks to the St. Marys Kiwanis Club.” Mr. Smith told the reporter that he was not doing any of this “for notoriety or publicity,” he simply believes that replacing the dollar bill with the dollar coin will help save the government $500 million a year.
Citizens Against Government Waste (CAGW) has long been supportive of increased use of the dollar coin, and applauds the effort by former Rep. Smith to get something done. However, he should not have to be fighting so hard; the U.S. Treasury already has the authority and ability to increase the use and circulation of the $1 coin.
On April 29, CAGW’s monthly “WasteWatcher” included an article by Research Associate Sean Kennedy, “Time to Revisit the Benefits of the $1 Coin.” The article noted that ”The advantages of using a $1 coin are obvious and substantial. According to an April 7, 2000 Government Accountability Office (GAO) report, replacing the $1 bill with a coin would save taxpayers $522.2 million per year. Most of the cost savings associated with coins comes from their comparative durability. The Bureau of Engraving and Printing produces approximately 3.4 billion $1 bills each year, each of which costs 4.2 cents to manufacture. Each bill has a lifespan of approximately 21 months. By comparison, the $1 coin costs slightly more to produce – 12 to 20 cents – but has a lifespan of 30 years or more.
”Other benefits include savings on the processing of money by banks and businesses. Coins cost 30 cents per thousand pieces to process at Federal Reserve Banks, compared to 75 cents per thousand for $1 notes. Large-scale private-sector users reap even more savings. Processing bills costs them more than 500 percent above processing coins. Coins are also much more difficult to counterfeit.
“In part, the slow progress in introducing coins is related to the public’s disdain for carrying around loose change. However, a December, 2002 GAO report asserted that public opinion shifts when respondents learn of the cost savings associated with a switch to coins. The GAO reported: ‘When told that it would save about half a billion dollars a year if the U.S. government replaced the dollar bill with the dollar coin, the number who said they were opposed dropped from 64 percent to 37 percent and those who said they were in favor of such a proposal increased from 17 percent to 55 percent.’”
In a letter to the editor of The Washington Post which was published on May 1, 2010, Thomas McMahon, the senior vice president and chief counsel for the National Automatic Merchandising Association from 2002 to 2009, wrote that ”Replacing $1 bills, which last about two years, with $1 coins, which last about 30 years, would save taxpayers at least $700 million a year in paper and printing costs. Eliminating the $1 bill would not remove George Washington from our money. His image appears on more than 40 billion quarters. Compared with trillion-dollar deficits, $700 million is a small sum. But it’s a start, perhaps an important start on the road to improved government efficiency as well as a visible reminder of the role of women in our nation’s history.”
Taxpayers need more people like Charlie Smith and Thomas McMahon to remind the government to do its job to promote greater use of the $1 coin so that it becomes as common as the dollar bill. While that would help alleviate some of the record budget deficit, it is a good idea regardless of economic circumstances.
Citizens Against Government Waste