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Congress looks at ditching $1 bill

By Kevin Freking

Associated Press

LAST UPDATED: 10:27 a.m. HST, Nov 30, 2012

WASHINGTON » American consumers have shown about as much appetite for the $1 coin as kids do their spinach. They may not know what's best for them either. Congressional auditors say doing away with dollar bills entirely and replacing them with dollar coins could save taxpayers some $4.4 billion over the next 30 years.

Vending machine operators have long championed the use of $1 coins because they don't jam the machines, cutting down on repair costs and lost sales. But most people don't seem to like carrying them. In the past five years, the U.S. Mint has produced 2.4 billion Presidential $1 coins. Most are stored by the Federal Reserve, and production was suspended about a year ago.

The latest projection from the Government Accountability Office on the potential savings from switching to dollar coins entirely comes as lawmakers begin exploring new ways for the government to save money by changing the money itself.

The Mint is preparing a report for Congress showing how changes in the metal content of coins could save money.

The last time the government made major metallurgical changes in U.S. coins was nearly 50 years ago when Congress directed the Mint to remove silver from dimes and quarters and to reduce its content in half dollar coins. Now, Congress is looking at new changes in response to rising prices for copper and nickel.

At a House subcommittee hearing Thursday, the focus was on two approaches:

—Moving to less expensive combinations of metals like steel, aluminum and zinc.

—Gradually taking dollar bills out the economy and replacing them with coins.

The GAO's Lorelei St. James told the House Financial Services panel it would take several years for the benefits of switching from paper bills to dollar coins to catch up with the cost of making the change. Equipment would have to be bought or overhauled and more coins would have to be produced upfront to replace bills as they are taken out of circulation.

But over the years, the savings would begin to accrue, she said, largely because a $1 coin could stay in circulation for 30 years while paper bills have to be replaced every four or five years on average.

"We continue to believe that replacing the note with a coin is likely to provide a financial benefit to the government," said St. James, who added that such a change would work only if the note was completely eliminated and the public educated about the benefits of the switch.

Even the $1 coin's most ardent supporters recognize that they haven't been popular. Philip Diehl, former director of the Mint, said there was a huge demand for the Sacagawea dollar coin when production began in 2001, but as time wore on, people stayed with what they knew best.

"We've never bitten the bullet to remove the $1 bill as every other Western economy has done," Diehl said. "If you did, it would have the same success the Canadians have had."

Beverly Lepine, chief operating officer of the Royal Canadian Mint, said her country loves its "Loonie," the nickname for the $1 coin that includes an image of a loon on the back. The switch went over so well that the country also went to a $2 coin called the "Toonie."

Rep. Bill Huizenga, R-Mich., affirmed that Canadians have embraced their dollar coins. "I don't know anyone who would go back to the $1 and $2 bills," he said.

That sentiment was not shared by some of his fellow subcommittee members when it comes to the U.S. version.

Rep. Lacy Clay, D-Mo., said men don't like carrying a bunch of coins around in their pocket or in their suits. And Rep. Carolyn Maloney, D-N.Y., said the $1 coins have proved too hard to distinguish from quarters.

"If the people don't want it and they don't want to use it," she said, "why in the world are we even talking about changing it?"

"It's really a matter of just getting used to it," said Diehl, the former Mint director.

Several lawmakers were more intrigued with the idea of using different metal combinations in producing coins.

Rep. Steve Stivers, R-Ohio, said a penny costs more than 2 cents to make and a nickel costs more than 11 cents to make. Moving to multiplated steel for coins would save the government nearly $200 million a year, he said.

The Mint's report, which is due in mid-December, will detail the results of nearly 18 months of work exploring a variety of new metal compositions and evaluating test coins for attributes as hardness, resistance to wear, availability of raw materials and costs.

Richard Peterson, the Mint's acting director, declined to give lawmakers a summary of what will be in the report, but he said "several promising alternatives" were found.

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onevoice82 wrote:
At this point in society, I am almost completely money free in my pockets. I use the iphone to pay for things now and that is the future in the next 5 years, so do what you want with the dollars and coins. Vending machines should go to phone scanning if they really want a low maintenance system!
on November 30,2012 | 09:57AM
HD36 wrote:
A true brainwashed sheeple who will be tracked from the time he gets up till the time he goes to sleep. Governments hate gold.
on November 30,2012 | 06:35PM
Anonymous wrote:
Before Congress ditches the dollar bill, they should eliminate both the penny AND the nickle. Not only would this save tons of money, it would make room in peoples' coin purses (or pockets) for the dollar coin. Pennies, especially, are a bother; who needs them.
on November 30,2012 | 10:28AM
waianae94 wrote:
on November 30,2012 | 11:45AM
loquaciousone wrote:
I don't want to carry around a bunch of dollar coins in my pocket because of the unsightly bulge it will create in my pants.
on November 30,2012 | 10:40AM
RetiredWorking wrote:
The strippers aren't gonna like this.
on November 30,2012 | 10:56AM
RichardCory wrote:
Well, there's already one unsightly bulge there. What's the harm in another?
on November 30,2012 | 11:43AM
false wrote:
LOL LOL LOL . Good one... as for the dollar bill, About time, and dump the penny too.
on November 30,2012 | 12:12PM
Waterman2 wrote:
Why not, it ain't worth squat anyway.
on November 30,2012 | 12:31PM
loquaciousone wrote:
47 minutes a new record low.
on November 30,2012 | 01:24PM
livinginhawaii wrote:
A very high percentage of the dollar bills in Hawaii are counterfeit. If you don't believe me pick up 10 used ones and hold them under a black light. Guaranteed 2 of them have very bright white paper. If you wonder how this could be, feel free to interview one of the bar owners on Keaumoku....
on November 30,2012 | 12:51PM
kennie1933 wrote:
It might just be me, but I guess just traditionally, bills seem to have more value than little coins. So with that mindset, when I visited Japan recently, they have a 500 yen coin, about the size of a quarter, which is ROUGHLY worth $5.00-$5.50 USD or so. They have drink vending machines practically everywhere with most drinks costing between 250-400 yen. I found myself popping the little 500 yen coins in the vending machines because "it's just a little coin." At night when I'd go back to the hotel, I'd "stock up" on a few drinks for the night, not realizing I'd spent almost $10 USD on drinks alone! It was just a couple of little coins! If I had to slide a $10 bill in the machine, I might think twice. Well again, maybe just me.
on November 30,2012 | 01:47PM
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