WASHINGTON — Replacing the one-dollar bill with a coin equivalent could save the government approximately $5.5 billion over 30 years, according to a new study by the Government Accountability Office (GAO), a congressional watchdog.
For 10 years, people advocating the elimination of the one-dollar bill have been referring to the last GAO study that touted the economical benefits of such a move. In that study, the GAO actually predicted higher savings from such a transition because the notes were only lasting 18 months on average. Today, due to technical improvements in processing, the average note now lasts 40 months.
The coins, on average, last about 30 years, according to Federal Reserve officials.
Introducing new coins would actually cost the government cash in the first four years, mostly in minting coins, but after that the savings would be realized.
According to the GAO, about $184 million would be made on average every year thanks to seigniorage — the difference between the face value of the new coins and their production costs.
The numbers certainly look good, but there is still the reality that 4.2 billion one-dollar coins were produced between 1979 and 2009, and have yet to be accepted by the public. Legislation has even been brought to Congress to forbid the greenback’s demise.
What would happen if the government replaced the note with a coin that people didn’t accept? One possibility would be greater use of electronic payments, according to the GAO. In that scenario, the savings would drop to $4.5 billion over the 30 years.
“Eliminating the dollar bill in favor of the dollar coin should be an easy decision for elected officials in Washington, who are looking everywhere for ways to reduce the record deficit and debt,” says Tom Schatz, president of Citizens Against Government Waste (CAGW), a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government. “The U.S. is supposed to be the economic model for the entire world, yet on this issue we are way behind other nations.”