Posted on 06/29/2011 12:38:29 PM PDT by Aroostook25
Politicians in Washington hardly let a few minutes go by without mentioning how broke the government is. So, it's a little surprising that they've created a stash of more than $1 billion that almost no one wants. Unused dollar coins have been quietly piling up in Federal Reserve vaults in breathtaking numbers, thanks to a government program that has required their production since 2007. And even though the neglected mountain of money recently grew past the $1 billion mark, the U.S. Mint will keep making more and more of the coins under a congressional mandate.
The pile of idle coins, which so far cost $300 million to manufacture, could double by the time the program ends in 2016, the Federal Reserve told Congress last year. A joint inquiry by NPR's Planet Money and Investigations teams found that the coins are the wasteful byproducts of a third, failed congressional effort to get Americans to use one-dollar coins in everyday commerce.
In 2005, Congress decided that a new series of dollar coins should be minted to engage the public. These coins would bear the likeness of every former president, starting with George Washington. There would be a new one every quarter. So, far, the Mint has produced coins through the 18th president, Ulysses S. Grant. Members of Congress reasoned that a coin series that changed frequently and had educational appeal would make dollar coins more popular. The idea came from the successful program that put each of the 50 states on the backs of quarters. But as the new presidential dollar coins rolled out, the greenback lost none of its dominance in Americans' hearts and wallets.
If the mandate to make presidential coins wasn't enough to generate a growing heap of unwanted coins, a political deal ensured that even more unwanted coins would be produced. It was easier for the bill's sponsor, then-Rep. Mike Castle (R-DE), to move the presidential coin bill forward if it didn't displace other dollar coins honoring Sacagawea, the teenage Native American guide to Lewis and Clark. The deal: The mint would be required to make a quota of Sacagawea coins. Currently, the law says 20 percent of dollar coins made must have Sacagawea on them. So, there are now about 1.2 billion dollar-coin "assets" chilling in Federal Reserve vaults, unloved and bearing no interest. By the time the presidential coin series finishes, and there are coins honoring all past presidents, there could be 2 billion.
Several congressional leaders contacted by NPR declined to comment for this story. The Senate Banking, Housing and Urban Affairs Committee has jurisdiction over coins. Its chairman, Tim Johnson (D-SD), would not agree to be interviewed about dollar coins. Neither would the committee's ranking member, Republican Richard Shelby of Alabama, who recently requested a Government Accountability Office study on dollar coins. Both the Mint and the Federal Reserve provided information for this story, but neither agency would agree to an on-the-record interview.
The finances of all of this? You could say the government has wasted money to make money. Some 2.4 billion dollar coins have been minted since the start of the program in 2007, costing taxpayers about $720 million. The government has made about $680 million in profit by selling some 1.4 billion dollar coins to the public since the program began. Still, it's the program's waste that hits home when you're staring at millions of unused coins.
Inside one basementlike Federal Reserve vault in Baltimore, NPR was able to see 45 million $1 coins of various types. The coins were overflow from vaults elsewhere. And despite a national indifference to the coins, they were heavily guarded. A group of journalists from NPR passed through a metal detector and special secure doorway before reaching the inner entrance to the vault, a fence gate secured by two common Master padlocks. Two staffers minding the coins each had a key to one of them, and as the NPR group moved around the vault, the minders kept the group physically surrounded. Inside the vault, dollar coins languished in clear plastic bags piled high on sturdy metal pallets that looked like baby cribs.
Through the bags, one could see Sacagawea mingling with Suffragette Susan B. Anthony and rubbing edges with some of America's early chief executives. Glaring fluorescent lights coaxed an occasional shimmer from the dollars, which are made mostly of manganese brass and have a gold color. One row of pallets bore a handwritten note that said, "Dollars ... 48 skids ... 6,720,000." But how many of them will ever see a laundromat, soda machine or toll booth? Without an overhaul to the cash system that completely substitutes coins for bills, very few.
Try, Try Again. After the Susan B. Anthony and Sacagawea series lost their bids to become America's pocket change sweethearts, the presidential series was the next big idea. But in a report to Congress last year, the Federal Reserve said the coins are now being held "with no perceivable benefit to the taxpayer," and that banks are sending them back to the Fed in increasing numbers. "We have no reason to expect demand to improve," the Fed said. "We also note that a 2008 Harris poll found that more than three fourths of people questioned continue to prefer the $1 note." Still, dollar coin proponents, including some advocacy groups and vending-based industries, are undeterred.
Leslie Paige, who represents watchdog group Citizens Against Government Waste, says the government should withdraw the dollar bill from the market and force Americans to use the coins. "I think Americans will definitely embrace the dollar coin if they're just given the opportunity," she says. As for the Harris Poll showing Americans don't want dollar coins, Paige says, "I suspect that they just don't understand what the up sides are," including the fact that coins don't need to be disposed of as bills are. "The idea that, 'Oh, I don't want them jingling in my pocket,' I mean, I don't know, most people carry quarters with them," Paige says. "They use them for meters and all kinds of other things, so I certainly think Americans can adapt."
Money-Saver Or Hidden Tax? You may have heard that dollar coins are more cost-effective than dollar bills. Paige and other dollar-coin advocates point out that coins last longer than bills, and that's why they save money. A coin could last 30 years, but a new dollar bill will be ready for the shredder in less than four years. But if moving exclusively to dollar coins would save money, the question is, whose money? Certainly, issuing the coins and having them circulate, rather than sit in vaults, would create a source of revenue for the government.
Whether taxpayers would benefit is another matter. A Government Accountability Office study out this spring says that switching to a dollar coin "would provide a net benefit to the government" of about $5.5 billion over 30 years. But it's not because coins are cheaper. The report says the government would not recover the cost of switching from bills to coins over that period. Instead, the benefit to the government would come only from the profit it makes by manufacturing each coin for 30 cents and selling it to the public for a dollar. When this profit, known as seigniorage, is factored out, switching to the dollar coin would actually cost taxpayers money over three decades, according to a Federal Reserve analysis of the GAO's figures. The cost works out to $3.4 billion. The Fed's Louise Roseman wrote to the GAO that seigniorage should not be considered in an analysis of whether the switch would benefit the larger U.S. economy. The reason, says Roseman, director of the Fed's Division of Reserve Bank Operations and Payment Systems, is that seigniorage " is a revenue transfer from the private sector to the government." So, in other words, a tax? The profit to the government predicted by the GAO assumes that the government would have to issue 1.5 dollar coins for every dollar bill removed from circulation. That's because people handle coins differently than they do bills.
Even if all dollar bills were replaced with coins, some say the nation's evident distaste for dollar coins will simply mean more small transactions will be done electronically. And, it could accelerate a technological trend toward payments with mobile devices. Jack Weatherford, an anthropologist who wrote the 1998 book The History of Money, says he loves coins, but he doesn't love the billion dollar coins piled up in the nation's coin vaults. "Destroy them," he said. "People will not accept these coins. Nobody in America wants to use them. As long as they have a paper currency, they will use that." Of using coins to save money, Weatherford says that in an era of electronic financial transactions, "the argument is about 50 years too late. Coins have rapidly become less and less important in our society — like paper money itself is becoming less and less important."
Buyer's Remorse For Bill's Proponents. Delaware's Castle, who left Congress after a primary loss and now practices law, acknowledges that the demand for golden dollars didn't materialize as he had hoped. Castle says he and others knew when they were passing the bill that widespread adoption of dollar coins would be hindered by the continuing production of dollar bills. But he says that mandating a wholesale switch from bills to coins was politically untenable then, as it is now. "It's not quite like cutting somebody's Social Security," Castle says, "but politically it's not something the members want to deal with, so it's just very hard to get something like that done."
When Congress was considering the law, the Congressional Budget Office warned that there would be low demand for the coins. The Federal Reserve Board cautioned that coin inventories and storage costs would increase. Castle says the coins should continue to be produced, but in smaller numbers. "It's ridiculous to have this kind of over-inventory pile up," he says. "I might actually make some phone calls myself as a result of reading these reports and learning more about what this problem appears to be."
But what should happen to that quota for Sacagawea coins, for which there is very little demand, and which the Federal Reserve no longer orders from the Mint? Earl Pomeroy, a former Democratic congressman from North Dakota who championed the quota while serving in the House, hedges a bit. Pomeroy stands by his defense of "dear old Sacagawea." But he acknowledges that there's at least some folly in continuing to make coins that will not be used. "I think the foolish part of the law may be not the Sacagawea part, but the fact that with no one picking up these coins, we've got to keep printing them because we've got to get through the rest of the presidents list," says Pomeroy, who lost his bid for a 10th term in Congress last year. "That to me doesn't seem to make any sense at all. "Is the nation waiting with bated breath for us to get to the Calvin Coolidge coin? No! Maybe we should call a halt to this whole thing."
All the latest and greatest (and most secure) vending machines use acceptance devices that are able to validate that only US coinage of the prescribed value is used.
If your machines are owned by an employee benefit association, which is very typical when the sole purpose is potato chips and candy, you now know why you lose money on it.
They were never confused with a quarter of half dollar. They made a fine sound when you had a whole stack of them in your hands and when a Dollar slot payed off the sound was sweet too.
The recently issued U.S. Grant dollar coin won’t be especially popular with many people here in the South!
“In 2005, Congress decided that a new series of dollar coins should be minted to engage the public.”
Those Congress folks are pretty smart. I wonder what would happen of they start messing with our light bulbs...
Oh. Never mind.
The ONLY coins worth having are REAL SILVER OR GOLD coins.
The only paper dollar bills worth having are those that say “Pay to the bearer ON DEMAND one Dollar in Silver or Gold.”
Now all they say are...”This note is legal tender for all debts public and private.”
The dollar coins are ALL in use, but in what are called CAPTIVE SYSTEMS. These are usually employee automated canteens or swing rooms ~ or snack/break stations ~ in factories, schools, large retail establishments, offices, etc.
The current Great Obama Recession has given us a very high unemployment rate and as a consequence the use of dollar coins has dropped ~ simply because there aren't enough employees to keep them in use getting softdrinks or food.
Fix the unemployment rate and those dollars will flow out of the depositories and back into the places where folks eat lunch at work!
Coins... Almost a relic from the past. It’s been a decade since I regularly carried change in my pocket. Everything with an odd price goes on a credit card.
Wow, what a story. I hope that guy’s a very rich man now. Personally, I would settle for nothing less than being made CEO of the company, with my very own Boeing Business Jet;)
Couldn't figure it out, the economy is sputtering....let's spend millions to strike new coins.
Great going Uncle Sugar, we expect nothing less...or is that more.
perfumed dollars? just turned in by a stripper maybe?
That size (38mm) will be needed for the $50.00 0.77 oz silver coin.
Those $1 coins are hard to get. Almost every bank we visit won’t have them. We want them, but the gov’t is not making it easy to obtain. Around here (SF), parking meters cost up to $3/hour. Feeding in a couple $1 coins is a lot easier than shoveling in a handful of other coins.
They made two mistakes. The first was making them cheap looking and prone to tarnishing. The second is that a $1 denomination was way too low.
Instead, make them a quality, mostly silver alloy, with a $100 denomination, with an elaborate, classy design depicting great events in US history concurrent to that president. Right now silver is very expensive, about $35/ounce, but there would be a LOT of warning if it were ever to approach anything like $100.
More than anything, these coins would be intended to be prestigious to own. Something US coins really haven’t been since the days of the $20 gold double eagle.
The last US coin that had any degree of chutzpah was the Eisenhower dollar. Coins since then have had all the flair and elan of recycled beer cans.
Give us a coin that archaeologists will dig up in a thousand years.
Our drink machines are owned and serviced by Coca Cola Enterprises, a private company that pays an annual fee to my employer to site the machines in its buildings. I don’t know who owns the snack machines. These machines are at least 8-10 years old.
“But then the price of strippers would double!”
Just like vending machines,,, drop your coin in the slot. (I might get in trouble for that one!)
Smallest in Canada is a five dollar bill.
“perfumed dollars? just turned in by a stripper maybe?”
Nah! 8^) I don’t know where they de-contaminate and perfume the bills. Maybe at the banks? I’ll have to ask my banker.
“My combined comments from the earlier thread on this subject;
I’m so sick and tired of these a-holes spending money on foolishness! Me? I’d phase out the one dollar bill. They don’t last very long at all, and are filthy with bacteria, etc.. Gimme the coins. They last about a thousand times longer than the paper bills. The coins can be recycled. Bills are just shredded and dumped into landfills.
I just opened my wallet to do a count before heading to Aldi. My wallet smells like a cheap hooker (I think! I wouldn’t actually know!). The banks decontaminate singles and spray them with some kinda junk. I hate that smell! The dollar coins have copper in them, which is a natural bactericide and anti-viral agent.
I’d like to ask these idiots if the current printing plates are worn out?? How much would the total cost be for designing and engraving new plates? I’m livin’ on a very strict budget, and these butt warts think nothing of spending our tax dollars on things that are not necessary! Like teachin’ African men how to wash their zooties! This has got to stop!!!!!
We don’t need to spend money on all these unnecessary things. Start saving everywhere NOW!”
I’d guess you need NEW MACHINES. 10 year old stuff should end up in church basements.
I got no problem with dollar coins, especially if they’re the kind make with real silver.
And yet the stamps vending machine I used at the post office did give them back as change.
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