GAO: Coins instead of cash could save government billions
By Peter Schroeder – 03/04/11 02:26 PM ET
On The Money – The Hill’s Finance & Economy Blog
With lawmakers looking high and low for places to cut government spending, the Government Accountability Office (GAO) has offered another suggestion — their wallets.
In a report released Friday, the GAO determined that replacing the $1 paper bill with a $1 coin would save the government about $5.5 billion over 30 years, as the more durable coins have a longer lifespan than paper money. Paper money generally lasts 1.5 years, while coins could last up to three decades, the GAO said.
While the government would lose money on the transition up front, as more coins were made, the government watchdog said Uncle Sam would ultimately reap the benefits of the dollar coin.
Although the government has introduced dollar coins to the public in the past, the GAO said those efforts failed to gain traction because the paper dollar remained in circulation. Other nations that have successfully replaced low-denomination paper notes with coins, like Canada and the United Kingdom, stop producing paper bills once the coins were introduced.
“This step was essential to the success of their transition and that, with no alternative to the note, public resistance dissipated within a few years,” the agency wrote.
When surveyed in 2002, 64 percent of the public opposes the elimination of the dollar bill, the GAO said. However, when informed that doing so could save the government hundreds of millions of dollars a year, that number dropped to 37 percent.
But it actually appears as if public love of the paper dollar has increased recently. The GAO noted a 2006 Gallup poll, which found that 64 percent of respondents still wanted to keep the paper dollar even if the government could save half a billion dollars a year by scrapping it. The study does not cite any surveys done in the wake of the financial crisis and economic downturn.
The report marks the fourth time the GAO has done the math on how much the government stands to save if it embraced the dollar coin, with its most recent effort coming in 2000.