Coalition Again Attempts to Put Dollar Bill Out of Business
Jukebox operators and copper miners may not have much in common, but they do share a commitment to putting an end to the greenback dollar bill.
A quirky coalition that includes security giant Brink’s Inc., independent car wash operators and public transportation officials has fired up a decades-old campaign to replace the dollar bill with the dollar coin.
Many of the same players have been fighting for and against the change for years, but the economic and political climate has given coin supporters new hope.
With lawmakers’ eyes on the federal budget, supporters argue that scrapping the dollar bill is a rare opportunity to cut government spending without political liability. Furthermore, several prominent Democrats who have supported the company that supplies the paper for U.S. bills have lost some of their clout.
The Treasury Department and the Federal Reserve have long opposed making the coin the sole $1 product, citing its weight (just over 8 grams) and the public’s stubborn attachment to paper currency. But Congress can mandate the end of the $1 bill, and the Dollar Coin Alliance is heavily pressuring lawmakers to make the change. The group has spent more than $250,000 lobbying Capitol Hill since December.
“This is very bipartisan,” said Shawn Smeallie, a former aide to President George H.W. Bush and a lobbyist at the American Continental Group who is guiding the campaign. “I think the only issue is one of inertia.”
The Government Accountability Office reported last month that phasing out the $1 bill could save the government $5.5 billion over the next 30 years. The switch from paper to coin was also included in the 2012 budget proposed by the Republican Study Committee, though it did not make it into the budget resolution passed by the House last week.
GAO argues that the government profits by printing new currency because it costs less to produce than it is worth. But the Fed and the Treasury say that does not amount to real profit that can be counted as budget savings. The departments also noted that the report does not reflect the costs to the banking industry, retailers and others who would have to update their systems and practices if dollar bills were phased out.
Regardless, Smeallie said he expects he will be able persuade a Member to sponsor a bill in the coming weeks. In 2006, then-Rep. Jim Kolbe (R) of Arizona, the country’s largest supplier of copper, introduced a bill that would have done away with the dollar, but it lay dormant in a Financial Services subcommittee. Kolbe, who introduced similar legislation at least five times throughout his career, said the main roadblock was American resistance to change.
“Americans are very conservative when it comes to their currency,” he told Roll Call. “Members of Congress like to shy away from anything controversial that they can. They want to avoid giving constituents something to call and yell about.”
Kolbe and many other coin supporters said politics has also been a major obstacle. Prominent Massachusetts Democrats such as Financial Services ranking member Barney Frank and the late Sen. Edward Kennedy have been ardent defenders of Crane & Co., which manufactures the cotton-based paper used in U.S. currency. The company, known to the public for its fine stationery, is based in the western Massachusetts district of 10-term Democratic Rep. John Olver.
“Clearly they had an interest in maintaining the use of the paper,” Kolbe said. “Crane was the only company that could qualify as the producer.”
Olver does not object to the production of the coin as long as the paper bill remains as well, said his chief of staff, Hunter Ridgway.
“We don’t really favor the bill over the coin or the coin over the bill. What he does favor is letting the public choose what they want,” Ridgway said, adding that an investment in any kind of cash may be a waste with consumers increasingly relying on credit cards and other cashless payment.
One-dollar bills represent nearly half of Crane’s currency business, and replacing the $1 note altogether would mean the loss of hundreds of jobs, the company said.
With Republicans in the majority, Frank is no longer the gatekeeper of the bills that reach the committee. Frank’s office did not respond to requests for comment.
Crane, which has spent hundreds of thousands of dollars lobbying for its cause in the past, is keeping a low profile now. Company officials said the GAO report was deeply flawed and is counting on those errors to speak for themselves.
“Anyone who has read that full report comes away shaking their head,” said Peter Hopkins, a spokesman for Crane. “We are asking Congress to get beyond the cover page.”
“Maybe that’s a touch naive,” he added.
Pretty much every industry involving coin-operated machines, from the subway to the arcade, prefers the dollar coin. The vending machine industry says it loses $1 billion annually to jammed bills, and 19 of the nation’s 20 largest mass transit systems accept coins because they say processing bills is six times more costly.
Before the establishment of the alliance in December, the copper and brass companies that would produce the new coins were engaged in independent campaigns to promote the coin. From 2006 to 2010, PMX Industries Inc., an Iowa-based copper supplier, for example, spent an average of $300,000 every year lobbying Congress, the Treasury and the U.S. Mint.
Still, previous attempts to transition from the bill to the coin have fallen flat largely because the coin just cannot compete with the familiar bill if they are both in circulation, government officials and industry representatives say.
Congress has repeatedly tried to increase use of the $1 coin, following the lead of other countries that have abandoned the paper single such as Canada, Australia and Japan. In 1997, Congress approved the creation of the Sacagawea coin, which was minted from 2000 to 2008.
In 2005, Congress passed a law requiring the use of $1 coins by federal agencies, the Postal Service, all transit agencies receiving federal funds and all entities operating businesses on government property. It also required the Mint, housed within the Treasury, to advertise the coin to the public. The coin still didn’t catch on, and in December 2010 the country’s Federal Reserve banks were still sitting on roughly 1.1 billion uncirculated $1 coins, according to the GAO.
The fight has been going on for so long that some in the industry have given up.
“It’s all politics,” said John Schultz, the president of the American Amusement Machines Association, who has worked for jukebox and vending manufacturers since the ’80s. “Thirty years we’ve been working on this and thrown a tremendous amount of money to it. Its time has passed.” Schultz said he doubts his organization will be putting any more money into the lobbying campaign.