Monday, 20 August 2012 06:44

Feds to phase out dollar coins

Written by  USA Today

The presidential dollar coin has fallen victim to Washington's cost cutting efforts. The White House said Tuesday it is stopping nearly all production of the coins.The presidential dollar coin has fallen victim to Washington's cost cutting efforts. The White House said Tuesday it is stopping nearly all production of the coins.

The U.S. Mint has produced $1.4 billion in surplus dollar coins that are sitting in Federal Reserve vaults. So Vice President Biden announced Tuesday that the Treasury Department would stop mass producing the presidential coins.

"They make hundreds of millions of these coins every year; 40% of them end up being returned to the Federal Reserve because nobody wants them. And here's the worst part: They're still making coins of presidents from the 1800s, meaning the United States Mint is about halfway through its planned production," Biden said at an event to highlight the administration's efforts to curb government waste.

"And as it will shock you all, the call for Chester A. Arthur coins is not there," Biden joked.

The Treasury Department says the move will save $50 million a year. "We shouldn't be wasting money on money," Treasury Secretary Timothy Geithner said.

But if the presidential coin is such a clear case of wasteful government spending, at least one taxpayer watchdog is growling.

"We're honestly outraged about this," said Tom Schatz, president of Citizens Against Government Waste. "If they wanted to stop producing something that loses money in terms of minting coins, they should get rid of the penny and nickel."

The dollar coin, he said, actually saves taxpayers money. That's because it costs 18 cents to produce, with the rest going to the government as profit. And because coins last longer than bills, shifting to a dollar coin could save $5.6 billion over 30 years, according to the Government Accountability Office.

But for that to happen, the government would have to take dollar bills out of circulation.

"I don't think that's something Americans want to see us do," said Rep. Kevin Yoder, R-Kan., the author of one of five pending bills that would have suspended production of dollar coins. "The Fed policy has been to promote the dollar bill and the dollar coin, and Americans have consistently chosen the dollar bill."

The Mint will make a limited number of presidential dollars available only to collectors willing to pay above face value, beginning with one featuring Arthur next spring, Treasury spokesman Matthew Anderson said.

Beth Deisher, the editor of Coin World magazine, called the presidential coin "a wonderful teaching tool, and a nice collectible at face value."

She said the Obama administration's decision to suspend production is just the latest blunder on dollar coin policy that's been mismanaged since the ill-fated Susan B. Anthony dollar — often confused for a quarter — in 1979. Since then, most other Western nations have saved money by moving their low-denomination bills to coins, she said.

"We can understand why they made the decision," she said. "But in the long run they're dealing with symptom, not the problem."