Treasury Secretary Timothy F. Geithner’s Dec. 13 decision to suspend production of Presidential dollars for circulation leaves many knowledgeable Americans, especially in the numismatic community, shaking their heads at the thought of yet another U.S. government debacle.
The sound bites on the Dec. 13 evening news seemed plausible to those unfamiliar with the real numbers. According to Treasury bureaucrats, Presidential dollar coin surpluses are likely to climb to 2 billion coins by 2016, the last year of the program, if production of circulation versions continues unabated.
In an attempt to show that it is cutting government waste, Obama administration officials claimed that since the dollar coins are not circulating, suspending dollar coin production will save $50 million to $70 million annually. And any seigniorage profit (currently 68 cents per coin) would be eaten up by shipping and storage costs.
The Dollar Coin Alliance was quick to respond, noting that if the administration is really concerned about reducing waste with the dollar coin stockpile the “smart solution” would be to eliminate the $1 Federal Reserve note, thus ensuring that the dollar coins would circulate. The Dollar Coin Alliance pointed out that in “repeated studies over two decades by the nonpartisan Government Accountability Office (GAO), the continued production of $1 notes costs taxpayers at least $5.5 billion over 30 years. The current $1 coin program actually reduces the federal deficit by nearly $300 million each year.”
The Dollar Coin Alliance drew its facts from a March 2011 GAO study titled Replacing the $1 Note with a $1 Coin Would Provide a Financial Benefit to the Government. According to the GAO report, transitioning fully to a dollar coin would save the U.S. government an average of $184 million per year and approximately $5.5 billion over a 30-year period. If more traditional assumptions are used, savings could be projected as high as $11.1 billion.
One has to question if anyone in any branch of the U.S. government ever reads GAO reports. The 2011 report was the fifth the GAO has issued on the benefits of transitioning to the dollar coin since 1990.
The traditional excuse — Americans prefer the paper dollar — has also been debunked.
The Tarrance Group and Hart Research in a January 2011 poll found that Americans favor transition to a dollar coin by a 2-1 margin, if the potential government savings are explained. The Dollar Coin Alliance points out this response is consistent with findings from the GAO’s own polling in 2002 and an ABCNews.com online survey in October 2011, which found that 76 percent of the respondents favored eliminating the note given the savings opportunity.
During 2012 our neighbors to the north in Canada will be celebrating the 25th anniversary of their beloved “Loonie” dollar coin. Serge Pelletier, editor of Moneta, the official publication of the Ottawa Coin Club, recently noted the Loon dollar’s approaching milestone observing, “Hard to believe we’ve ever been without it!”
How much longer will Americans allow politicians to duck this issue? ■