Press Release: Government Accountability Office Reaffirms Dollar Coin Savings
Government Accountability Office Reaffirms Dollar Coin Savings
Watchdog Says Eliminating the $1 Bill Saves Billions
Washington, D.C. (February 15, 2012) The Dollar Coin Alliance, a coalition of small businesses, budget watchdogs, transit agencies and labor groups, today endorsed the Government Accountability Office’s (GAO) continued recommendation to eliminate the $1 bill and transition to the $1 coin. The report indicates that eliminating the $1 note would save the country $4.4 billion over a 30-year period, or $146 million per year. This finding is consistent with five previous reports issued by GAO over the past 20 years (in 1990, 1993, 1995, 2000 and 2011) indicating savings of anywhere from $184 million to $522 million per year.
“The GAO has looked at this issue again and again, and always their recommendation is the same – eliminate the $1 bill and you will save the country billions of dollars,” said former Congressman Jim Kolbe, honorary chairman of the Dollar Coin Alliance. “In a time of record budget deficits, this type of common sense change is a no-brainer.”
As Lorelei St. James, Director of Physical Infrastructure for the GAO, whose team authored the report, put it, “With the current budget situation that we’re all aware of, we felt Congress needs to be aware of all the viable options for gaining financial benefits, and replacing the dollar note with a dollar coin provides such a benefit over the long term.”
The report was produced in response to a request from Senator Scott Brown (R-MA), ranking member of the Federal Services subcommittee of the Homeland Security and Government Affairs Committee, which has jurisdiction over GAO. The Senator requested that the Agency alter its savings estimates in regards to the dollar coin. Massachusetts-based Crane & Co. is the single-source provider of paper currency in the United States.
“Despite Senator Brown’s claims to the contrary, the GAO continues to report billions in taxpayer savings by making this transition,” said Tom Schatz, President of the Citizens Against Government Waste and a member of the Dollar Coin Alliance. “The American taxpayer is sick and tired of these political games and they trust the independence of the GAO.”
In fact, there are many indications that the billions of dollars saved noted in this latest study by GAO may actually be conservative. Using more traditional assumptions in the GAO’s model, savings could be as high as $11.1 billion over 30 years (see chart below):
- Lifespan of Note: The GAO assumes that $1 notes will last up to 56 months, a goal the Federal Reserve has set but never achieved. According to numerous Federal Reserve Bank websites (in Philadelphia, Chicago, New York, Richmond and elsewhere), the current average lifespan of a $1 note is in fact closer to 22 months.
- Transition Costs: The report indicates costs to the government in the early years due to the United States Mint investing in equipment and other up-front expenses. However, the GAO has pegged direct costs to the Mint at only $8 million. This cost is far out-weighed by increased profit to the government generated by producing $1 coins vs. $1 notes.
- Replacement Ratio: Most prior reports by the GAO used a replacement ratio of 2:1 coins to notes. This is consistent with the experience of most other modern economies that have made the transition from low denomination paper currency in the previous decades. Applying the 2:1 ratio generates a far greater savings than the GAO’s current estimate which relies on a 1.5:1 replacement ratio.
“There is no doubt that the savings will be greater than those estimated by GAO in its latest report. When Canada made the switch from paper to coins several decades ago, taxpayers saved 10 times the initial government estimates,” added Tom Schatz. “Nobody can dispute that this report again confirms that switching to a $1 coin will save the United States billions of dollars.”
In January, a bipartisan group of senators led by Senator Tom Harkin (D-IA) and Senator John McCain (R-AZ) introduced the Currency Optimization, Innovation and National Savings (COINS) Act (S. 2049) to save the country billions of dollars by eliminating the wasteful, inefficient $1 note. The Senators are joined in their effort by original co-sponsors Sens. Tom Coburn (R – OK) and Mike Enzi (R-WY). 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 away from low denomination paper currency. This is a companion bill to the COINS Act in the House, HR 2977, introduced by Congressman David Schweikert (R-AZ). The House bill currently has the bipartisan support of twelve co-sponsors.
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.
|Year||Estimate ||Estimate + Ratio||Estimate + Lifespan||Est + Ratio + Lifespan|
|10 year TOTAL||215||1,345||935||2,065|
|30 year TOTAL||5,500||8,900||7,700||11,100|
For more information, or to get involved, please visit www.DollarCoinAlliance.org.