Press Release: Administration Misses Opportunity for Dollar Coin Savings
Obama FY 2013 Budget Punts on Dollar Coin Issue
Washington, D.C. (February 14, 2011) – The Dollar Coin Alliance, a coalition of small businesses, budget watchdogs, transit agencies and labor groups, today strongly disapproves of the Obama Administration’s half-measures to reform our nation’s currency in its fiscal year 2013 budget.
Yesterday, the Administration released a $3.8 trillion budget which included more than $900 billion in deficit spending. Under the Cuts, Consolidations, and Savings section, the White House first takes credit for the decision to halt the production of $1 coins as an example of cutting government waste. Oddly, the Administration later acknowledges that “the suspended production of the Presidential dollar coin will reduce the amount of revenue available for the Mint to offset production costs of the penny and the nickel.” (Cuts, Consolidations, and Savings section, page 173)
In 2011, United States Mint reported nearly $400 million in profits from the $1 coin, making the coin the most profitable denomination. Profits from the Mint are transferred to the Treasury General fund and used to pay down government debt. In 2011, the $1 coin was responsible for 110 percent of the Mint’s Circulating Coin program profits and generated 73 percent of the Mint’s profit overall. Without the program, the government might need to make up the Mint’s shortfall through additional spending.
“The Administration’s budget wants to have its cake and eat it too,” said Tom Schatz, President of the Citizens Against Government Waste, “If the White House really wants to save taxpayers money, they’ll heed the advice of the nonpartisan Government Accountability Office, which has been advocating the elimination of the $1 note for 20 years.”
According to the report released in March by the GAO, hundreds of millions of taxpayer dollars are wasted each year by the continued use of the dollar note. The report, “Replacing the $1 Note with a $1 Coin Would Provide a Financial Benefit to the Government,” found that transitioning fully to a $1 coin would save the government an average of $184 million per year and approximately $5.5 billion over a 30 year period. Using more traditional assumptions in their analysis, savings could be as high as $11.1 billion. This was the fifth report the GAO has issued on the benefits of transitioning to the dollar coin, dating back to 1990. Estimates of annual cost savings in previous reports have been as high as $522 million.
In September, Congressman David Schweikert introduced the bi-partisan Currency Optimization, Innovation and National Savings (COINS) Act (H.R. 2977), a bill to modernize the nation’s currency system by eliminating the $1 note – a change virtually every country in the world has made in the past several decades to reduce waste. This bill was followed by a companion bill (S. 2049) in the Senate introduced by Senators Tom Harkin (D-IA) and John McCain (R-AZ). The COINS Act would require Federal Reserve Banks to stop issuing the $1 note four years after enactment of the legislation or when circulation of $1 coins exceeds 600 million annually – whichever comes first. This measure is necessary based on the experience of every country that has successfully transitioned to a low denomination coin. As the GAO reported, eliminating the dollar note was “essential to the success of [the] transition” to dollar coins in other countries.
Members of the Dollar Coin Alliance include Citizens Against Government Waste, the International Association of Machinists, the National Bulk Vendors Association, Southeastern Pennsylvania Transportation Authority, Tri-State Automatic Merchandising Council and United Steelworkers.