There?s been a lot of talk recently, on Capitol Hill and elsewhere, about shared sacrifice. Recently, Congress empowered the supercommittee to come up with a 10-year, $1.2 trillion deficit-reduction plan. That would have been no small feat, and the lawmakers did bruit about various ideas to eliminate government waste, streamline the Tax Code and cut discretionary spending.
Well, here?s a modest proposal ? something that could save us billions of dollars without raising taxes or cutting programs. It?s time to eliminate the $1 greenback.
Continue ReadingEach year, the United States produces roughly 4 billion $1 bills; most of these are needed just to replace the 3 billion $1 bills that are pulled from circulation, shredded and sent to landfills annually. At the same time, a $1 coin lasts for 30 years or longer ? check your pockets if you don?t believe me ? and during its lifetime, it could do the job of up to 17 $1 dollar notes.
The government?s own watchdog, the nonpartisan Government Accountability Office, has long advocated the elimination of the dollar bill. Its most recent report in March estimated that switching from a $1 bill to a $1 coin would save at least $5.5 billion over 30 years. Previous studies, dating back to 1990, have put the savings at more than half a billion per year. If we had listened to the GAO the first time, we could already have saved more than $10 billion. I don?t know about you, but where I come from, that?s real money.
Think about it. Everyone would rightly scoff at the notion of using paper for pennies, nickels, dimes and quarters. How does it make any more sense to continue using a dollar bill, which today has the value of a 1970s quarter? The fact is, ?paper? currency ? actually a cotton/linen composite ? is not very durable. It would cost us too much to have to replace those low-value coins over and over again. So, we make low denominations out of alloys.
Similarly, the paper dollar was never intended to be heavily traded when it was initially introduced 150 years ago. In 1860, when Abraham Lincoln was campaigning for president, a dollar bill could buy a quarter acre of land or cover the cost of renting a room for an entire month. A dollar was more than a day?s wage for a laborer.
So most small transactions were made in coin. That?s not true today, and it is costing us money. A lot of money.
This is the primary reason nearly every other major economy retired its low-denomination paper money decades ago. Those countries have proved that significant benefits exist, so this is not just theory. Indeed, when Canada made the transition 25 years ago, the savings realized were more than ten times government estimates.
Average Americans are demanding that Washington find reasonable debt-reduction measures. Abandoning the dollar bill is one simple option that can get us started. A January 2011 poll by the Tarrance Group and Hart Research revealed that the public actually favors a dollar coin transition by a 2-to-1 margin after they understand the cost savings.
Sometimes, it can be hard to see easy solutions because we are simply stuck in our old ways of thinking. The supercommittee?s inability to agree on a deficit-reduction solution and the partisan infighting that accompanied it underscore that we should focus on areas where both Republicans and Democrats can agree ? solutions that help reduce our deficit and save billions without cutting programs or raising taxes. In today?s climate, it will become harder and harder to ignore this simple, common-sense change.
Former Rep. Jim Kolbe, a Republican, served Arizona?s 8th Congressional District from 1985 to 2007. He is currently a senior transatlantic fellow at the German Marshall Fund, senior adviser at McLarty Associates and honorary chairman of the Dollar Coin Alliance.
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