Back in September, Rep. David Schweikert, R-Ariz., a member of the House Financial Services Committee, submitted legislation that would phase out $1 bills in favor of $1 coins – a move that Schweikert says would help combat the nation’s deficit and curb government waste. But a new poll out this week indicates that the public disagrees: The overwhelming majority of Americans view the legislation as no more than another budget gimmick disguised as a means of cutting costs.
Results from the Luntz Global poll indicate that the American people have lost faith in Washington’s ability to find real solutions to the nation’s debt problems, even as the congressional super committee races against a deadline to agree on a deficit-savings plan by Wednesday. A vast majority of respondents, 81 percent, agreed that Congress has a poor record when it comes to implementing efficiency. Seventy-three percent believed the coin proposal is a political ploy being misrepresented as a means of cutting government costs, and only 15 percent of those surveyed believed the proposal would save taxpayer dollars.
The Currency Optimization, Innovation and National Savings Act would require Federal Reserve banks to stop issuing dollar bills within four years, or when circulation of dollar coins exceeds 600 million annually. According to a statement on Schweikert’s website, the government would save an average of $184 million a year, and at least $5.5 billion over 30 years, by making the switch.
But the proposal has met with opposition from those who do not want the paper currency to disappear. The Government Accountability Office released a report in March that seems at first glance to support Schweikert’s claim, but a group that opposes Schweikert’s proposal, Americans for George, claims that the report uses an “accounting trick” to get the purported benefit, and ignores the cost to the private sector.
According to Randy DeCleene, a spokesman for Americans for George, the government will actually face a net loss in the first four years after enactment of the legislation – a fact that the GAO report itself acknowledges – which is due to what the report calls “the up-front costs to the U.S. Mint of increasing its coin production during the transition.”
DeCleene said the government would break even only after the first 10 years, and there is no guarantee that the legislation would actually save money. An analysis by Fiscal Economics indicates that the purported benefit in the report results from the assumed ability of the government to replace the existing stock of $1 notes with 50 percent more $1 coins, and counts the difference as revenue.
In addition, DeCleene said the GAO report does not include the negative impact the switch would have on the private sector. The analysis found that a switch to dollar coins would increase annual costs to businesses by $201.85 million and lead to at least 4,300 job losses. And then there are the capital expenses: Businesses would have to install additional storage facilities, safes, new cash registers, and counting machines to accommodate the coins.
According to DeCleene, the only way to get the coin to work is to eliminate the dollar bill entirely – but the Luntz Global poll reported that an overwhelming 83 percent of Americans favor keeping the paper form.
“History is full of failed coin initiatives,” DeCleene said, referring to the rarely seen Sacagawea, Susan B. Anthony, and presidential dollar coins. “People like the bill: It’s convenient, it’s something they’re used to, it’s an iconic symbol of America in the U.S. and abroad.”