Consumer groups are lining up to force the Federal Reserve to push more - much more - $1 coins into circulation. Groups like Citizens Against Government Waste are getting particularly aggressive, claiming the savings of turning to coins are substantial, and that coins are much more durable. Will Uncle Sam play ball?
TUTORIAL: The Federal Reserve
First, some facts. According to the Board of Governors of the Federal Reserve, right now the U.S. Treasury has about $1.4 billion in unused and unwanted $1 coins. That's so much inventory the federal government recently announced that it wound end its program of producing presidential $1 coins - or at least suspend it. (For related reading, see How The Federal Reserve Was Formed.)
In a Dec. 13, 2011 statement from Neal Wolin, deputy secretary of the Treasury, he said the following:
"One area where there's an additional opportunity to cut taxpayer costs is reducing the current surplus inventory of $1 coins. That's why we're announcing today that - effective immediately - the United States Mint is suspending the production of new presidential $1 Coins for circulation."
"Minting $1 coins that ultimately end up sitting in Federal Reserve Bank vaults - and serve no useful purpose for businesses, financial institutions and consumers - is simply not a prudent use of taxpayer resources," he added.
"The steps we're announcing today will save at least $50 million annually over the next several years," said Wolin. "That's the right decision for taxpayers."
Not everyone is on board for the coinless dollar. A Congressional move to modernize the U.S. currency leans heavily on a $1 coin.
Back in September, the Currency Optimization, Innovation and National Savings (COINS) Act was introduced by Arizona Congressman David Schweikert (R-AZ). The Act seeks to ban not the $1 coin, but the $1 bill.
Instead, the Act seeks a transition to the greener and cheaper dollar coin, a move that the U.S. Government Accountability Office (GAO) has been touting for more than 20 years. A March, 2011 report from the GAO estimates the move to a dollar coin would save about $184 million annually, and over $5.5 billion over the next 30-years.
Consumer advocates say the bill's time has come to be approved - no matter what the U.S Treasury is doing. "During a time when bipartisan debt reduction measures are in short supply, this is a piece of legislation we hope everyone in the Congress can get behind," said former Congressman Jim Kolbe, honorary chairman of the Dollar Coin Alliance. "Americans are demanding that we find common sense solutions to begin bringing down our long-term debt - here's a simple way to do just that without raising a single tax or cutting a single program."
Kolbe points to a survey by the Tarrance Group and Hart Research that concluded that U.S. adults favor a switch to a dollar coin by a two-to-one margin.
Other consumer advocates seem to agree. "We are literally throwing our money away," says Tom Schatz, president of Citizens Against Government Waste. "The reality is dollar bills last about three years while coins last 30 or more. This small 'change' will save the United States billions." (For additional reading, see The History Of Money: From Barter To Banknotes.)
The Bottom Line
So there you have it, two sides of the coin on the metal versus currency debate. While the paper-advocates have the upper hand now, that may not be the case after Congress weighs in on the matter. (To learn more, read What Is Money?)