Studies released this fall by three different research groups show that most Americans don’t support legislation proposed by U.S. Rep. David Schweikert, R-Ariz., which would replace $1 bills with $1 coins.
Fiscal Economics, Luntz Global and John Dunham & Associates conducted studies indicating a switch could actually eliminate jobs and cost the government billions of dollars over time.
Schweikert’s Currency, Optimization, Innovation and National Savings Act was originally proposed as a cost-cutting measure, however, the study conducted by John Dunham & Associates found that the measure would increase annual costs to businesses by $201.85 million and lead to at least 4,300 in job losses.
“Essentially, changing to a coin would be a tax increase on retail and service firms of all sizes from coast to coast,” said John Dunham, president of John Dunham & Associates in a statement released by the firm Nov. 7. “Americans are already struggling with a poor economy and high unemployment rates, and forcibly removing the $1 bill from circulation will only exacerbate these problems for business owners.”
Not only would the COINS Act damage an already floundering U.S. economy, but according to the results of the Luntz poll, 83 percent of Americans prefer to keep the $1 bill instead of switching to the dollar coin, citing national pride and convenience as a few of the reasons for maintaining the paper version of the $1 bill.
The Luntz poll also found that only 15 percent of Americans thought that the switch would actually end up saving the government money in the long run.
“I could not be more emphatic: the American people do NOT want a dollar coin. Period,” said Frank Luntz, CEO of Luntz Global in a Nov. 17 press release. “To Americans, this move is just another gimmick disguised as a cost-cutting measure.”
Supporters of the COINS Act cite a Government Accountability Office report, which states that more than 3 billion $1 bills are pulled from circulation annually and destroyed, a waste of resources that could be avoided by making the transition to a $1 coin — which would last the lifetime of 17 $1 bills. This transition is estimated to save the U.S. government $184 million annually and a total of $5.5 billion over the next 30 years.
The GAO compiled the information regarding the cost of transition in a March 2011 report, however Patrick Fleenor, author of the Fiscal Economics study found several faults in the GAO report, which he claims led to faulty conclusions by the office.
“Eliminating the $1 bill and replacing it with a $1 coin will cost American taxpayers billions of dollars in the long run,” Fleenor said in a statement on Oct. 28. “Based on my analysis, there are no long-term savings associated with a switch to the dollar coin.”
According to Fleenor’s research, the GAO did not consider the transition’s switch on the private sector, which would be severely damaged by such a switch.
The GAO report also concludes that the cost of replacing the $1 bill with $1 coins would never fully be accounted for in the 30-year analysis.
Fleenor said the “benefits” of such a switch resulted from replacing the existing $1 bills with 50 percent more $1 coins and counting the difference as profits. This is something that Fleenor said is nothing more than an accounting trick.
The COINS Act was introduced to congress Sept. 20 and was referred to the Subcommittee on Domestic Monetary Policy and Technology, where it is still being reviewed.
Reach the reporter at doberhau@asu.edu
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