The U.S. Congress is currently considering a bill (HR 2977 “Currency Optimization, Innovation, and National Savings Act” also called the COIN Act; not to be confused with HR 2635 “Cutting Out Inefficient and Needless Spending Act” or COINS Act) that could save the federal government an estimated $5.5 billion over 30 years, or roughly $184 million per year, by replacing the $1 bill with a $1 coin.
A recent Government Accountability Office (GAO) report (PDF) states, “…GAO’s analysis, which assumes a 4-year transition period… indicates that the benefit would vary over the 30 years…. the [federal] government would incur a net loss in the first 4 years and then realize a net benefit in the remaining years.” While I generally support legislation that cuts spending, I do not believe the COIN Act goes far enough. The COIN Act allows the Federal Reserve to continue printing $1 bills for 4 years or until the U.S. Mint begins circulating 600 million dollar coins per year, whichever is first. The bill does not specify whether or not the Fed may issue more $2 notes, something I believe it will likely do.
Current federal law requires a dollar coin to be issued by the U.S. Mint “…that is 1.043 inches in diameter” and “[t]he dollar coin shall be golden in color, have a distinctive edge, have tactile and visual features that make the denomination of the coin readily discernible, be minted and fabricated in the United States, and have similar metallic, anti-counterfeiting properties as United States coinage in circulation on the date of enactment of the United States $1 Coin Act of 1997.” However neither the existing law nor the COIN Act legislate the value of the material to be used; which means, if passed, one currency with no intrinsic value (the paper dollar) would be replaced by another (the coin).
Some opponents of HR 2977 cite the added costs to businesses of converting cash registers and vending machines, as well as the higher transportation costs associated with coins. Tom Ferguson a former head of the Bureau of Engraving and Printing says, “the world won’t come to an end, but Americans will be carrying around a lot more coins.” I believe that without a paper dollar people would carry less cash and rely more heavily on plastic; though, like Ferguson, I have no evidence to support this claim.
All in all, I believe the COIN Act is a bad bill, not because it would impose on the people a coin they don’t want to use, but rather because it continues to invoke legal tender laws and government control of the currency. A much better alternative is HR 1098 the Free Competition in Currency Act which would repeal the legal tender law; repeal the government monopoly over the creation of coins for use as currency and prohibit federal and state taxes on precious metal coins and bullion.