Mr. President, I rise today with the Senator from Nevada, Senator Reid, to introduce the Presidential $1 Coin Act of 2004. This legislation, which is modeled after the successful 50-State quarter program, would add the image of U.S.…
Mr. President, I rise today with the Senator from Nevada, Senator Reid, to introduce the Presidential $1 Coin Act of 2004. This legislation, which is modeled after the successful 50-State quarter program, would add the image of U.S. Presidents to the circulating dollar coin. I believe this bill, when enacted, will prompt more widespread usage of the dollar coin, earn significant funds for the U.S. government and spark new interest in the history of the leaders of our Nation.
The United States Government currently issues a dollar coin. Unfortunately, many Americans don't know about the coin and most don't use them. In fact, the dollar coin has never lived up to its promise to become a primary component of the American economy. I believe as policy makers, it is our job to ask what this costs our economy and our government, why the dollar coin is not widely used, and what can be done to remedy it.
With a one-dollar coin in general circulation, our economy will be more efficient, and our government will reap the significant benefits that a fully circulating coin will generate. To illustrate, millions of low-dollar transactions occur in our country every day. Bringing even the smallest efficiency to each would result in significant savings to the economy. For example, the vending machine industry estimates that the effect of a widely circulated dollar coin in its sector alone could be as much as $1 billion in savings: $300 million in increased sales and $700 million in reduced maintenance costs. Add to that the savings that businesses would realize by experiencing lower handling costs-- it's simply much more expensive to sort and count bills than coins--and one begins to get a sense of the economies that could be achieved if our dollar coin program were more of a success.
In the public sector, the savings are hardly less dramatic. Informed estimates put the effect of a fully circulating dollar coin at as much as a $500 million annual infusion to the Treasury general fund. These funds are created by the difference between what it costs to make a coin or bill and what it's worth. For a dollar coin, the difference, which is called seigniorage, is about 80 cents. While there is no direct comparison for a dollar bill, as the accounting methods are different, the gain to the general fund is much less. Another savings comes from the fact that a coin can do its work for 30 years, while a dollar bill has a lifespan of only about 18 months before it wears out and needs to be replaced.
With such clear advantages on the side of the dollar coin why doesn't the American public use the coin? The answers are fairly well known and were documented by the GAO in a 2002 report to Congress. Let me address some of the problems outlined by the GAO.
First, there is the so-called ``network effect.'' This interdependency of demand is described by the GAO this way-- ``Increasing the use of the coin is especially difficult because retailers will not stock the dollar coin until they see the public using it, the public is unlikely to use the coin until they see retailers stocking it, and banks and armored carriers are reluctant to invest in new equipment to handle the coin until there is wide demand for it.'' Second, there is a lack of public information about the savings to the government from using the dollar coin. Third, business users found difficulty in getting the newer ``golden'' dollar coins in a useable form--they are not rolled like other coins and because they are generally commingled with the older Susan B. Anthony dollars. Fourth, design mistakes made with the Susan B. Anthony dollar led many to confuse the coin with the quarter and spend it at a 75-cent loss. Finally, the most difficult problem of all, Americans prefer the dollar bill to the dollar coin because they can get an adequate supply of them, and they are readily accepted everywhere.
The GAO summed it up with this conclusion in its 2002 report, ``. . . until individuals can see that the coin is widely used by others and that the government intends to replace the dollar bill with the dollar coin, they will be unlikely to use the coin in everyday transactions.''
The bill I am introducing today will address many of these problems. It will do so by getting the dollar coin in people's hands and pockets. It will provide the information that Americans need to make rational decisions and it takes steps to eliminate other barriers to circulation of the coin. Although this legislation does not take the dollar bill out of circulation, it is well known that continued circulation of the dollar bill is expensive to businesses and consumers alike. Therefore, I am today writing the GAO asking that it carefully examine this issue and update its findings from its last comprehensive review made in 1990.
Now, I turn to the specifics of my legislative proposal. Beginning in 2006, the bill would cause the images of four U.S. Presidents to appear on the dollar coin a year, each in the order of their service, until all are so honored. The reverse of the coin would feature the Statue of Liberty. The edge of the coin would hold important information, such as the date and the so-called mintmark. It is important to note that coins bearing the image of Sacagawea, who currently appears on the face of the dollar coin, will continue to be issued during the period of the Presidential Coin Program established by this bill. I draw my colleague's attention to the fact that her image will be joined by the images of U.S. Presidents, not displaced by them. This is only appropriate, especially as we celebrate the bicentennial of the Lewis and Clark Expedition of which she was such an important part.
To complement the Presidential Coin Program, my bill would also create a new puregold bullion coin to honor presidential spouses. At the same time each president's image appears on the circulating dollar coin, the spouse's image would appear on a one-half ounce pure gold coin. It is my hope that together the Presidential coin and the Spouse coin will spark excitement and interest in the dollar coin and get it into circulation. These coins will appeal both to collectors and to investors.
As I mentioned earlier, the Presidential Coin Program is modeled after the wildly successful 50-state quarter program. As all my colleagues know, that program has aroused new interest in coins, coin collecting and the history of our nation's states. Before it began, the U.S. Mint was producing about $400 million in quarters a year. Demand in the first year of the quarter program shot up to $1.2 billion in quarters that year. Seigniorage from the quarter halfway through the 50-state program has surpassed all expectations, amounting to more than $4 billion, close to the $5 billion that was predicted for the whole 10-year program. I believe that the Presidential Coin Program will have a similar effect on the dollar coin, creating interest and familiarity with the dollar coin and revenues for the U.S. government.
The bill I am introducing with Senator Reid would also take other important steps toward getting Americans used to the dollar coin and removing barriers to its circulation. For example, it would cause the Federal Government to use the dollar coin in all its retail operations. Incredibly, this is not the case now. Except for the U.S. Postal Service, few other Federal agencies make use of the coin. Also, the bill would take the Susan B. Anthony dollar coin out of circulation, ending the problem--identified by many business owners--of commingling of the new and
old dollar coins. There would be, however, no problem for the Sacagawea and Presidential dollars to circulate at the same time, as they both would be of the attractive ``golden'' color. The bill also would cause the dollar coins to be available in convenient forms, including rolls and small bags, so that businesses can use them easily. Now, it's hard to get dollar coins except in pillow-sized bags, from which they must be counted before they can go into cash registers.
Finally, this legislation will create a new, pure-gold bullion, one- ounce coin with the image of the so-called ``Indian Head'' or ``Buffalo'' nickel. Here, I must note that the design is so popular that when our colleague Senator Campbell, authored legislation to re- create that design as a limited-edition silver dollar to benefit the National Museum of the American Indian now under construction on the Mall, all half-million copies allowed sold out within two weeks. This will be an opportunity for collectors to get a pure-gold copy of the coin, but it will also be an opportunity for investors to buy an investment-grade coin. Other countries, including the People's Republic of China, make this kind of pure-gold investment vehicle available to their citizens, but to date the U.S. Mint gold investment-grade coins have only been about 90 percent pure. I'm certain that with the quality work of the Mint and the imprimatur of the United States Government, this coin will be well-accepted into the market.
Let me conclude, by saying that I believe the bill I am introducing today will put the dollar coin on the map and in the pockets of Americans. That's good for commerce and it's good government.