According to a new report by the Government Accountability Office (GAO), American taxpayers would actually save a substantial amount of money if the dollar bill were replaced by dollar coins.
The GAO, the “congressional watchdog,” who investigates how the federal government spends taxpayer dollars conducted a study entitled, “Benefits and Considerations for Replacing the $1 Note with a $1 Coin.” The recently issued report explains, “replacing $1 notes with $1 coins could potentially provide $4.4 billion in net benefits to the federal government over 30 years.”
The logic behind the study and the potential cost benefits from a switch is largely because coins are more durable and would not need to be replaced as often as dollar bills do. The GAO has argued for more than 20 years in six previously released reports that replacing the one-dollar note with a coin would be advantageous to the American taxpayer.
Even so, Americans don’t have a particular fondness for the $1 coins and the GAO admits this fact. It even goes so far as to say, “Efforts to increase the circulation and public acceptance of the $1 coins have not succeeded.” While admitting an American preference for the dollar bill over the coin, the GAO also claims that part of the problem is that the dollar bill has remained in circulation. In other words, it claims that old habits and preferences are hard to break.
In addition to the recent study, there are numerous case studies in which other nations discontinued lower denominated bills with coins successfully. The GAO report cites Canada and Britain as two prime examples with Canada saving taxpayers more than $450 million in the last 5 years.
The results of the recent GAO study and the Canadian example make a strong case for transitioning from the bill to the dollar coins. Even so, there is a case against pennies and nickels as well. In 2011, it cost American taxpayers 2.4 cents to produce a single penny and 11.2 cents for each nickel. That seems like an inordinate amount of wasted money for coinage whose face value is worth less than the materials it costs to produce them. Given the fact that America’s mint produces more than 4 billion pennies and 900 million nickels a year it quickly adds up.
Getting rid of coinage with Abraham Lincoln and Thomas Jefferson and a bill with George Washington may be unpopular and somewhat controversial. Nevertheless, in an era of belt tightening and looming tax increases, it appears like an easy cost saver.
While any such decisions would prove to be a drop in the bucket to addressing our current fiscal mess, there is something to be said for action in this area. As the old saying goes, a penny saved is a penny earned.
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