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Government Watchdog Flips On Dollar Coin

Apr 8, 2019
Originally published on April 9, 2019 6:03 am

Who says a dollar doesn't go as far as it used to?

When it comes to dollar bills, a new report from the federal government says they're lasting more than twice as long as they were at the beginning of the decade.

And that's upending an old argument about replacing the dollar bill with a $1 coin.

Analysts have long argued that the federal government could save money by making the switch because even though coins cost more to mint, they last much longer than paper money. In 2011, the Government Accountability Office estimated the savings at $5.5 billion over 30 years.

But a second look from the GAO flips that coin argument on its head. Analysts now say the government would lose between $611 million and $2.6 billion over 30 years by phasing out the dollar bill. The economics have shifted because dollar bills are lasting longer.

"When we last looked at this issue in 2011, the paper dollar was only lasting a little bit over three years," said John Shumann, an assistant director at the GAO. "When we looked at this issue again this year, we found that the paper dollar is now lasting almost eight years long."

Shumann said that's partly because of changes in the way the Federal Reserve processes dollar bills. But it's also a sign that in an increasingly cashless world, paper dollars aren't getting around like they used to.

"They're often showing less signs of wear and tear," Shumann said.

As part of its research, the GAO surveyed lots of industries that might have a stake in the paper-versus-coin contest and found that most are not eagerly embracing the switch to $1 coins.

Even the Coin Laundry Association.

"You know, it's right in our name," said CEO Brian Wallace, whose group represents some 30,000 self-service laundries around the country.

Despite the name, only a handful of those businesses currently accept $1 coins. Meanwhile, alternative payment options have proliferated.

"You could still pay with a quarter," Wallace said. "But you could also pay with a credit card or add value to a card. Or taking the Starbucks approach of just waving the phone at the washer and it starts."

Other businesses long associated with coins have also moved on.

"Once upon a time, toll roads, along with transit systems and the post office itself were the largest coinage handlers in the country," said Neil Gray, director of government affairs for the International Bridge, Tunnel and Turnpike Association.

Not anymore. Fewer than 1 in 5 toll-road users pay cash today.

"To the extent possible, we've had entire toll road systems eliminate cash completely," Gray said.

Even slot machines have largely done away with coin slots.

(One exception is the gumball machine industry, which told the GAO it could offer higher-quality gum and toys if more people carried $1 coins.)

The new GAO report may discourage congressional efforts to phase out the dollar bill. In any case, $1 coins have proved stubbornly unpopular with the public. That's why the Fed has more than a billion of the coins sitting unused in storage.

Copyright 2019 NPR. To see more, visit https://www.npr.org.

ARI SHAPIRO, HOST:

Who says a dollar bill doesn't go as far as it used to? A new report from the Federal Government says those bills are lasting more than twice as long as they did at the beginning of the decade, and that's upending an old argument about replacing the dollar bill with a one-dollar coin. Here's NPR's Scott Horsley.

SCOTT HORSLEY, BYLINE: For years now, there's been a persistent lobbying effort to force dollar coins on the American public. There's even a group called the Dollar Coin Alliance - co-chaired, oddly enough, by a former congressman named Tim Penny. Its argument has been that the government could save money by switching to dollar coins which last so much longer than paper money. And the Government Accountability Office used to agree. But on the subject of dollar coins, the GAO has flipped. It now says paper bills are more cost-effective. The GAO's John Schumann says that's because paper dollars now last more than twice as long as they used to.

JOHN SCHUMANN: When we last looked at this issue in 2011, the paper dollar was only lasting a little bit over three years. And when we looked at this issue again this year, we found that the paper dollar is now lasting almost eight years long.

HORSLEY: Schumann says that's partly because of changes in the way the Federal Reserve processes dollar bills. But it's also a sign that, in an increasingly cashless world, paper dollars aren't getting around like they used to. As part of its research, the GAO surveyed lots of industries that might have a stake in the paper-versus-coin contest and found most are not eagerly embracing the switch to coins, even those you might think would have a vested interest.

BRIAN WALLACE: Yeah. It's right in our name - Coin Laundry Association.

HORSLEY: Brian Wallace represents some 30,000 coin laundries around the country. He says only a handful have retrofitted their machines to accept dollar coins. But just about any other form of payment goes.

WALLACE: You could still pay with a quarter. But you could also, you know, pay with a credit card or add value to a card or taking the Starbucks approach of just, you know, waving the phone at the washer and it starts.

HORSLEY: Likewise, highway toll booths.

NEIL GRAY: Once upon a time, toll roads along with the transit systems and the post office itself were the largest coinage handlers in the country.

HORSLEY: Neil Gray of the International Bridge, Tunnel and Turnpike Association says paper dollars can tie up traffic when they get jammed in a toll booth collection box. But that doesn't mean the IBTTA is itching for dollar coins.

GRAY: To the extent possible, we've had entire toll road systems eliminate cash completely.

HORSLEY: That means dollar bills are lasting longer, and there's less financial incentive for the government to replace them with dollar coins. Anyway, dollar coins have proven stubbornly unpopular with the public. That's why the Federal Reserve has more than a billion one-dollar coins unused in storage. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.