BAD AS THE NATION’S financial situation may be, Congress has not quite reached the point of searching under the sofa cushions for loose change. But the debt-reduction “supercommittee” may be about to consider the legislative equivalent: a proposal by Rep. David Schweikert (R-Ariz.) for a four-year phase-out of the George Washington dollar bill in favor of a dollar coin.
This idea has been around for years, and it gained currency (sorry) in March, when the Government Accountability Office estimated that the switch could save $5.5 billion over three decades.
You might think that the dollar-coin proposal would be a no-brainer compared to cutting Medicare or eliminating the mortgage-interest deduction. You would be wrong: Instead of an easy compromise, the dollar-coin proposal shapes up as yet another illustration of how politically difficult it is to reduce any federal expense, no matter how modest. The problem isn’t so much partisan polarization as what economists call the “collective action problem”: Deficit reduction is good, in the long run, for the public in general — but getting there requires short-run sacrifice from beneficiaries of the status quo, who tend to be both loud and well-represented in Washington.
Sure enough, a number of “stakeholders” — the current euphemism for special interest groups — profit from the fact that the United States, unlike most advanced industrial countries, still circulates a small-denomination bank note. And they are making themselves heard.
The National Armored Car Association, for example, says hauling heavy coins would increase fuel costs. It has joined a new lobby, Americans For George Coalition, which is led by SICPA, a Swiss maker of counterfeit-proof inks, and Crane & Co., the Treasury’s sole supplier of currency paper since 1879. The International Plate Printers, Die Stampers, Plate Makers and Engravers Union, whose members make money at the Bureau of Engraving and Printing, also supports Americans for George, as does the Mount Vernon Ladies’ Association.
Crane & Co. is located in Massachusetts, the home state of a supercommittee Democrat, Sen. John F. Kerry. Mr. Kerry and Sen. Scott Brown (R-Mass.) are co-sponsoring a bill that would curtail dollar-coin production.
Of course, there is an opposing Dollar Coin Alliance: It includes the steelworkers’ union, the vending machine association, and organizations representing the copper and brass industries. Metal mining is a major industry in Mr. Schweikert’s home state.
There is a respectable case to be made against the dollar coin: Previous versions have met with poor public acceptance; there are about a billion stockpiled in government vaults. The GAO’s analysis showed several years of losses to the government before savings kick in.
On balance, though, the merits favor a coin: Past attempts have failed because the government continued to offer a dollar-bill alternative. If you eliminate that, as Mr. Schweikert’s bill would, then business and consumer acceptance should be no problem. The government could draw down existing stockpiles to meet demand. Given the country’s financial emergency, it’s worth a try.
The big worry here is that even this relatively minor issue won’t be decided strictly on the merits — and what that might portend for the supercommittee’s chances of success on the big stuff.