For Immediate Release February 15, 2012

Contact:  Leslie K. Paige 202-467-5334 Luke Gelber 202-467-5318

GAO Says $1 Coin Saves Taxpayers Billions

(Washington, D.C.) – Today, Citizens Against Government Waste (CAGW) issued a statement endorsing the Government Accountability Office’s (GAO) latest 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. Today’s report marked the sixth statement by GAO in favor of switching to $1 coins. Its five previous reports, published in 1990, 1993, 1995, 2000 and 2011, indicate savings of anywhere from $184 million to $522 million per year.

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 and lasts 40 months. By comparison, the $1 coin costs between 12 and 20 cents but has a lifespan of 30 years or more. The $1 coin also saves money because it is cheaper to handle and process.

Taxpayers would likely save even more than the GAO’s latest model predicts. Its assumptions are based on an increase in the longevity of $1 bills, a goal the Bureau of Engraving and Printing has set but never achieved. According to Federal Reserve Bank websites in Chicago, New York, Philadelphia, and Richmond, the current average lifespan of a $1 note is less than two years, which is more in line with the assumptions GAO used in its previous, larger savings estimates.

Further, prior GAO estimates relied on 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 previous decades. The replacement ratio most likely to occur would therefore generate a far greater savings than the GAO’s current estimate, which relies on a 1.5:1 replacement ratio.

A March, 2011 GAO report pointed out that “Over the last 47 years, Australia, Canada, France, Japan, the Netherlands, New Zealand, Norway, Russia, Spain, and the UK, among others, have replaced lower-denomination notes with coins,” and that “Canadian officials … determined that the Canadian government saved $450 million (Canadian) between 1987 and 1991.”

“The GAO has looked at this issue again and again, and their recommendation is always the same – eliminate the $1 bill and the country will save billions of dollars,” said Tom Schatz, President of Citizens Against Government Waste. “In a time of record budget deficits, this commonsense proposal should be implemented without any further delay. 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.”

“Nobody can dispute that this report again confirms that switching to a $1 coin will save the United States billions of dollars,” added Schatz. “Switching to the $1 coin will not eliminate a single program or raise taxes by a single penny. CAGW will continue to lead the way to make sure that the long overdue transition to $1 coins occurs.”

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