Remember the $1 coin? Probably not, considering none of us really use it. That’s why there’s about $1 billion worth of them sitting in the Federal Reserve’s vault. But now, the supercommittee charged with fixing our federal deficit might be unearthing the dollar coin from its grave.
In a story in USA Today, the 12-member Joint Committee on Deficit Reduction is reportedly considering a proposal to phase out the $1 bill and replace it with a dollar coin. While the move would cost the government money in the short term, it would eventually save an estimated $5.6 billion over 30 years, according to the Government Accountability Office. That’s because paper currency lasts about 42 months, whereas coins theoretically last forever.
But the poor $1 coin has a long history of unpopularity, even as Congress has pushed for wider circulation. Dollar coins have been around virtually since the country’s founding, but the bill has almost always been the denomination of choice for most Americans (even as most European countries use coins instead of small bills). Still, Congress has attempted to increase the dollar coin’s use over the last few decades, most notably with the release of the Sacagawea dollar coin in 2000. When’s the last time you used one of those?
Another attempt was made in 2007, this time with the $1 presidential coin program, which was a Congressional effort to get more coins into circulation while also being educational. Instead, about 40% of those coins are sitting in the Federal Reserve’s vault, completely unused.
When dollar coins were introduced in the past, there was often no urgent reason for doing so. But this time could be different. The federal government is clearly in a massive financial hole, and the supercommittee appears to be looking at a number of ideas to right the ship. Considering we’ve been so reliant on bills for decades, however, the transition would certainly be difficult.
While vending companies and mass transit agencies support the coin, paper and ink producers and even the armored-car industry opposes the move, essentially because it would be hard for them to carry around the weight of all those coins.
But even if Congress approves a phase-out of the dollar bill, there’s no guarantee that we would successfully transition to coins. In fact, they might have to start making room in the Federal Reserve’s vault for them.