CAGW ISSUES SPENDING CUT ALERT ON THE DOLLAR COIN PROGRAM

Replace the $1 Bill with the $1 Coin to Save Taxpayers Money

(Washington, D.C.) – Today, Citizens Against Government Waste (CAGW) issued a spending cut alert for the dollar coin. CAGW urges the administration and Congress to increase the circulation of the $1 coin and phase out the use of the $1 bill.

Thirteen years ago, Congress passed the U.S. $1 Coin Act of 1997, giving the U.S. Treasury the authority to get $1 coins into circulation. The advantages of using a $1 coin are 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. The savings would likely be even higher today.

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. The $1 coin saves money because it is cheaper to handle and process. Mass transit agencies have found that processing $1 coins costs 83 percent less than processing $1 bills. 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.

The Federal Reserve and the U.S. Mint are required by law to remove barriers to the $1 coin’s circulation. However, the Federal Reserve issues the United States’ paper currency and doesn’t like the competition from the $1 coin, which is issued by the Mint. The Fed’s leaders have instituted regulations and red tape that restrict access to $1 coins for banks, businesses, and individual Americans.

The elimination of the $1 bill has been among CAGW’s targets for spending cuts and is included in CAGW’s Prime Cuts database, a compendium of 763 waste-cutting recommendations that would save taxpayers $350 billion in the first year and $2.2 trillion over five years.

“While Prime Cuts is not the only answer, it will help reduce the $1.3 trillion deficit, the $13.7 trillion national debt, and keep more money in the hands of individuals and small businesses that can more directly address the stubborn 9.6 percent jobless rate,” said CAGW President Tom Schatz. “Taxpayers now recognize that President Obama and his congressional allies will say anything to sound fiscally rational, but their actions tell a different story. The spendthrifts in Washington, D.C. should read and adopt every recommendation in the 2010 Prime Cuts,” Schatz concluded.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.