Congress has begun considering saving a buck by eliminating the buck.
Rep. Jim Kolbe, R-Ariz., is sponsoring a bill that would replace the $1 bill with a $1 coin, saying it would save the government billions of dollars over the 30-year life of a coin.Opponents say, however, that consumers would pay, with weighted-down pockets and overpriced snacks from vending machines. They also say the proposal is just a pork-barrel project for the copper mines in Kolbe's district.
Kolbe testified at a congressional hearing Wednesday that paper bills cost 4 cents to print, but last only 17 months. Dollar coins, on the other hand, would cost 8.4 cents to mint, but would last 30 years.
Kolbe said the American people rejected the Susan B. Anthony dollar coin in 1979 because it looked and felt too much like a quarter and because the dollar bill continued to circulate.
His proposal would withdraw dollar bills from circulation and replace them with a gold-colored coin about the same size and weight as the Anthony coin and with increased production of $2 bills.
"I am amused by images opponents of this legislation have used of pockets overflowing with coins," Kolbe said. "I wonder if they have been to a laundromat recently."
He said consumers would benefit by reduced use of quarters for tolls, buses and parking meters, which require some people to carry around rolls of quarters.
Kolbe said transit authorities around the nation would save $125 million if they didn't have to sort, straighten and count bills. He said Chicago employs 20 workers to just straighten 410,000 $1 bills every day.
Every major industrial country except the United States has replaced its lowest value paper currency with a coin, Kolbe said, noting that in every case, public opinion was strongly against the change, but shifted quickly to support.
L. Nye Stevens of the General Accounting Office told the subcommittee that Kolbe's proposal would save the government an average of $395 million a year, with most of the savings coming from seignoirage, which is the difference between the face value of the coin and its intrinsic worth.
The Save the Greenback Coalition said these seigniorage savings are phony, amounting to nothing more than an accounting trick. The coalition released its own cost study, analyzed by Price Waterhouse, which determined that federal savings would total only $85.2 million in the first five years.
The coalition said the environmental costs of increased coinage would outweigh any savings to the government.
The Sierra Club, the Audubon Society, American Rivers and the Natural Resources Defense Council said 30 million tons of additional copper mining would be required for the new coin, with high costs in air, water and land pollution.
The coalition also said prices at vending machines would probably go up if the $1 coin were mandated, since many machines would have to be altered to accept the coin.
But Kolbe said 80 percent of the country's 5 million vending machines are ready to accept the coin and that eliminating the $1 bill would reduce the need for expensive bill changers.