US Mint to Cut Presidential Dollar Production
Nick Pyle
By: Neal S. Wolin (Neal S. Wolin is Deputy Secretary of the Treasury)
Treasury Announcement Follows
12/13/2011
The Treasury Department has taken a number of important steps in
recent years to improve its efficiency and cut costs. We've increased
the use of electronic transactions through our “Paperless Treasury”
campaign, significantly reduced energy consumption, identified ways to
use existing workspace more effectively, and implemented other
critical savings initiatives.
But there's more work to be done to build on that progress. In June,
President Obama issued an Executive Order establishing the Campaign to
Cut Government Waste, charging federal agencies with scouring their
operations from top to bottom for further ways to streamline
government and cut costs. And Vice President Biden has been leading
the effort to make government more efficient and effective, ensuring
that we are responsible stewards of taxpayer dollars.
One area where there's an additional opportunity to cut taxpayer costs
is reducing the current surplus inventory of $1 coins. That's why
we're announcing today that – effective immediately – the United
States Mint is suspending the production of new Presidential $1 Coins
for circulation.
To understand why we are taking this action, it's important to start
with some background on the issue.
In 2005, Congress enacted the Presidential $1 Coin Act. That law
mandated that the United States Mint issue four new Presidential $1
Coins each year from 2007 to 2016.
When each new Presidential $1 Coin is introduced, Federal Reserve
Banks order enough coins from the United States Mint to meet initial
demand from financial institutions. For a variety of reasons, however,
the demand for each of the new Presidential $1 Coins usually drops
significantly soon after they are introduced. As a result, financial
institutions have ended up returning a substantial amount of the $1
Coins that were initially minted – about 40 percent – to Federal
Reserve Banks.
At the end of the most recent fiscal year, the Federal Reserve Banks
held nearly 1.4 billion surplus dollar coins in their vaults – enough
to meet current levels of circulating demand for more than a decade.
Based on current trends, the Federal Reserve estimates that its
surplus inventory of $1 coins will grow to 2 billion by the end of the
program in 2016.
Source: Board of Governors of the Federal Reserve
Minting $1 coins that ultimately end up sitting in Federal Reserve
Bank vaults – and serve no useful purpose for businesses, financial
institutions, and consumers – is simply not a prudent use of taxpayer
resources. In fact, a number of members of Congress have expressed
concerns over the growing inventories, and some have introduced
legislation to suspend or end outright the Presidential $1 Coin
Program.
The U.S. Mint has taken steps to help address the growing inventory of
$1 coins. But stronger action is necessary, particularly at a time
when it's critical that we cut waste and improve efficiency across all
areas of government.
Under existing law, the Secretary of the Treasury has the authority to
“mint and issue coins . . . in amounts the Secretary decides are
necessary to meet the needs of the United States.” Given the
substantial, growing inventory of $1 coins, it is clear that the
minting of hundreds of millions of additional $1 coins over the next
several years is not necessary and is not an effective use of taxpayer
dollars.
As such, Secretary Geithner is ordering the immediate suspension of
the minting of the Presidential $1 Coin for circulation. Regular
circulating demand will be met through the Federal Reserve Banks'
existing inventory of nearly 1.4 billion $1 coins, which will be drawn
down over time.
Consistent with the Presidential $1 Coin Act, those who would like to
obtain future Presidential $1 Coins can purchase them directly from
the U.S. Mint during specified periods. The next coin in the series,
the President Chester A. Arthur $1 Coin, will be released in the
Spring of 2012 and is expected to a have a dramatically lower
production run, which will be set based on collector demand. Prices
and shipping costs for future $1 Coins will be announced in the near
future and will be set at a level that ensures that they do not result
in a cost to taxpayers.
The steps we're announcing today will save at least $50 million
annually over the next several years. That's the right decision for
taxpayers. And going forward, we'll continue our work to identify
additional opportunities to support President Obama's critical
objective to cut waste and improve efficiency across government.
Commentary: It's the dollar bill that should be discontinued! How
many trees die for the bill that wears out in just a few months!
Background: Bill Protects Massachusetts Business Interest at Taxpayer
Expense
Washington, D.C. (September 27, 2011) The Dollar Coin Alliance, a
coalition of small businesses, budget watchdogs, transit agencies and
labor groups, today announced their strong opposition to the “Currency
Efficiency Act,” a bill sponsored by Senators Scott Brown and John
Kerry to significantly modify the federal $1 coin program. The bill
comes despite the fact that repeated nonpartisan studies by the
Government Accountability Office have shown that replacing the $1 note
with a $1 coin would save billions of dollars for taxpayers. Brown and
Kerry represent the state of Massachusetts, home to Crane & Co., long
the nation’s single-source supplier of $1 note currency paper.
“Unfortunately, it seems the Senators have chosen to protect a local
business at the expense of the American taxpayer,” said former
Congressman Jim Kolbe, honorary chairman of the Dollar Coin Alliance.
“At a time when the government needs to be looking to save every
dollar, we can’t continue to play the same Washington game of serving
narrow special interests with half-measure legislation.”
A March 2011 report by the nonpartisan Government Accountability
Office (GAO) found that hundreds of millions of taxpayer dollars are
wasted each year by the continued production of the dollar note. The
report, “Replacing the $1 Note with a $1 Coin Would Provide a
Financial Benefit to the Government,”demonstrated that a full
transition would save the government an average of $184 million per
year and approximately $5.5 billion over a 30 year period. Using more
traditional assumptions in their analysis, savings could be as high as
$11.1 billion. This was the fifth report the GAO has issued on the
benefits of transitioning to the dollar coin, dating back to 1990.
Estimates of annual cost savings in previous reports have been as high
as $522 million.
“If the Senators are truly interested in saving money, they would
support the elimination of the dollar bill, not the dollar coin,” said
Tom Schatz, President of the Council for Citizens Against Government
Waste. “Compared to $1 notes, coins last 9 times longer, cost 83
percent less for mass transit companies to process and cost 47 percent
less to process at Federal Reserve Banks.”
Last week, Congressman David Schweikert introduced the Currency
Optimization, Innovation and National Savings (COINS) Act (H.R. 2977),
a bill to modernize the nation’s currency system by eliminating the $1
note – a change virtually every country in the world has made in the
past several decades to reduce waste. The COINS Act would require
Federal Reserve Banks to stop issuing the $1 note four years after
enactment of the legislation or when circulation of $1 coins exceeds
600 million annually – whichever comes first. This measure is
necessary based on the experience of every country that has
successfully transitioned to a low denomination coin. As the GAO
reported, eliminating the dollar note was “essential to the success of
[the] transition” to dollar coins in other countries. A January 2011
poll conducted by the Tarrance Group and Hart Research found that
Americans favor the transition to a dollar coin by a two-to-one margin
once the potential government savings are explained.
“We urge the Senators to join us in our effort to achieve a real,
lasting taxpayer savings by moving fully to a $1 coin,” added
Congressman Kolbe. “The COINS Act is the only legislation to date that
responsibly reforms our currency system and reduces the deficit.”
While dollar bills last only a few years, a $1 coin can remain in
circulation for more than 30 years. This means a single dollar coin
can replace up to 17 dollar notes during its lifetime. Additionally,
while billions of dollar notes are shredded and sent to landfills each
year, $1 coins are 100 percent recyclable – meaning that even after
coins are pulled from circulation, they can be melted down and forged
into new coins. The private sector also stands to benefit from a
dollar coin transition. Jammed dollar bills in vending machines cost
the industry hundreds of millions in annual repair costs and lost
sales. Evidence from the transit industry indicates that it is six
times less expensive for businesses with high levels of cash
transactions to process $1 coins versus $1 bills.
“With all the talk in Washington of draconian budget cuts and
austerity measures, switching to the dollar coin makes sense,” said
Tom Buffenbarger, President of the International Association of
Machinists. “It reduces the deficit without cutting any programs that
hurt working people or raising the tax burden on the middle class.”
The Dollar Coin Alliance is a coalition of American small businesses,
budget watchdogs, trade associations and labor organizations with a
singular focus of moving the United States toward an economical,
environmentally friendly dollar coin. Members include Citizens Against
Government Waste, the International Association of Machinists,
Southeastern Pennsylvania Transportation Authority, Tri-State
Automatic Merchandising Council and United Steelworkers.
LUV2JOURNEY
Any coin you can purchase from the US Mint at face value should have been an eye opener for the Treasury Department a long time ago, but obviously they didn't feel like cutting their budget until things have gotten so out of control that they are forced to cut spending.
As far as this ugly dollar coin, I couldn't be happier to see it go!
Do you think some day they will start being more creative with new coin designs and stop putting pictures of dead presidents on them or do they want to continue with losing money and purposely not getting new collectors in the hobby?
S. Stewart