The dollar bill's days may be numbered. At least, that could be the case if one government watchdog had its way.
A recent report from the Government Accountability Office, which is an arm of the U.S. Congress, argues that replacing U.S. dollar bills with dollar coins could save the government roughly $4.4 billion in net benefits over the next 30 years.
“We continue to believe that replacing the note with a coin is likely to provide a financial benefit to the government,” Lorelei St. James, a director the GAO, stated in a report prepared for a Congressional hearing on Thursday. “We realize that replacing the $1 note with the $1 coin is controversial.”
Indeed, the idea is largely unsupported by the public as many Americans are reluctant to use dollar coins over bills. In 2011, 40 percent of dollar coins in circulation were returned to the U.S. Treasury unwanted, leading to a $1.4 billion surplus in the currency, according to the U.S. Treasury.
Leading the initiative to kill the dollar bill are Sens. John McCain (R-Ariz.) and Tom Harkin (D-Iowa), NPR reports. Although both Arizona and Iowa stand to profit from increased production of dollar coins -- Iowa is home to a huge metal company and Arizona hosts some of the country's biggest copper mines -- Harkin contends that the U.S. should follow the global trend toward coins if the government wants to save money.
"The most important thing is it's just more efficient. It's way more efficient than a paper dollar," Harkin said. "Canada has a coin that's worth $2... Switzerland has one worth about $5... And yet, what have we got? We got a 25-cent piece."
Efficiency aside, Capitol Hill remains divided on the issue. In December 2011, the Treasury suspended the production of dollar coins entirely after the U.S. Mint predicted that it had enough $1 coins to last the next 10 years. At its previous rate of growth, the surplus inventory of dollar coins was projected to grow to be as large as $2 billion by 2016 costing taxpayers money. The measure stood to save at least $50 million annually over the coming years, according to the U.S. Treasury.
It costs roughly 5.2 cents to produce a dollar bill according to the Federal Reserve System Board Of Governors. Although a dollar coin actually costs more to make, it stays in circulation roughly 10 times as long as the dollar bill, according to Daily Finance.
While some Americans may mourn the death of the dollar bill, many would be elated if the penny was eliminated instead. Not only does the coin cost more to make than it is worth, many American business owners have stopped accepting them entirely because of the hassle in dealing with the small coin. Nationwide, organizations like Citizens for Retiring the Penny and Penny Free Biz have emerged to promote the end of the little Lincoln-faced coin.
But with the state of the economic recovery tenuous at best, some politicians are advocating to abandon our current system of currency entirely. Jerry O’Neil, a Republican state legislator in Montana, recently asked to be paid in gold and silver coins rather than dollars, which he believes will soon be reduced to a junk currency.
(Hat tip: Wall Street Journal)