WASHINGTON -- Vice President Joe Biden said at a Dec. 12 cabinet meeting that the U.S. Mint would suspend the production of Presidential dollar coins for circulation as part of the Obama Administration's campaign to cut waste. "It will shock you all -- the call for Chester A. Arthur coins is not there," Biden said in a deprecating aside about the coin series.
Treasury Secretary Tim Geithner concurrently ordered the immediate suspension of the minting of the coins. The move will save taxpayers at least $50 million a year in production and storage costs, he said.
Nearly 1.4 million dollar coins are currently in storage in federal facilities. Based on current trends, the Federal Reserve estimates that its surplus inventory of $1 coins will grow to two billion by the end of the program in 2016.
The Dollar Coin Alliance said it will oppose the new policy and continue to fight for the elimination of dollar bills. "This decision [to stop minting Presidential dollar coins] doesn't make sense," said DCA's honorary chairman, former Rep. Jim Kolbe (R-AZ).
"They eliminated the wrong currency," said DCA lobbyist Shawn Smeallie. The Obama Administration's decision to cancel the Presidential $1 coin program will cost taxpayers $283 million per year, the DCA said on its website.
The DCA will lobby Congress on behalf of the COINS Act, which would phase out the $1 bill in favor of a dollar coin. COINS was introduced in the House last September by Rep. David Schweikert (R-AZ); a companion bill has not yet been introduced in the Senate. | SEE STORY
According to Politico.com, the DCA spent $90,000 on federal lobbying efforts in 2010. From January through September 2011, DCA spent $450,000 and employed five lobbyists between January and September.
Congress enacted the Presidential $1 Coin Act in 2005, requiring the Mint to issue four new Presidential $1 coins each year from 2007 to 2016.
Dollar coins have become an issue of national controversy in recent months. Several major newspapers -- the L.A. Times, Chicago Tribune and USA Today -- have endorsed elimination of one-dollar banknotes in favor of the dollar coin.
Yet shortly after Schweikert introduced his pro-coin bill, Sens. Scott Brown (R-MA) and John Kerry (D-MA) proposed the Currency Efficiency Act of 2011, intended to halt dollar coin production whenever surpluses are high. | SEE STORY
The National Bulk Vendors Association recently joined the Dollar Coin Alliance to help advocate against the pro-paper legislative push. | SEE STORY
"For bulk vending, the dollar coin is worthless without eliminating the dollar bill because no one currently carries the coins," said Don Goletz, Vendomatic (Frederick, MD), who is NBVA legislative chairman and interim treasurer. "As long as there's a dollar bill, retailers are not going to change the way they do things and people won't have dollar coins as change in their pockets to spend in the bulk vending machine. Only if the dollar bill is eliminated will it make a difference."
Eliminating the dollar bill would benefit all sectors of the vending industry for numerous reasons, Goletz said. Chief among them are the superior reliability of coin acceptance versus bill validation and the ease of counting and sorting coins over handling bills.
But the move would have the biggest impact on bulk vending, according to Goletz, who observed that electronic pricing allows full-line vending operators to change pricing in nickel increments. Both full-line vending and amusement machines also have the advantage of bill acceptance and can support cashless payments.
"We take quarters and prices are in multiples of quarters," the bulk operator emphasized. "It's a big undertaking of time and money to change a coin mechanism, which we must do with every price increase. We'll need to do it again to accommodate dollar coins, but it will be a bang for the buck if the dollar bill is eliminated. It would be the greatest change for the industry in decades."
Without widespread dollar coin circulation, the move to a $1 vend in bulk would have little impact since most consumers often don't have four quarters in their pockets, Goletz said. "For two kids, a parent would need eight quarters. But they'd need only two dollar coins," he commented. "Most people don't typically have eight coins in their pockets, but if there's no dollar bill in circulation, odds are a couple of the coins in their pocket will be dollar coins. People would automatically have more spendable coin in their pockets that they're willing to part with quicker than bills."
Goletz emphasized, as NBVA and other $1 coin proponents have lobbied for decades, that all other industrialized nations do not have $1 banknotes. "The bulk vending business in Canada is $1 and $2 coins and operators are prospering. It's not uncharted grounds; it works," he said. "And at the same time, customers are getting higher quality merchandise."
Following that course would ensure the future of the U.S. bulk industry, said Goletz. At its peak, the NBVA had 800 members; today that number has dwindled to 150. "Eliminating the dollar bill would allow the industry to move to higher end product and have the coins to do it," he emphasized. "We'd have the ability to accept $1, and even $2, $3 and $4 product, since we could take up to four coins. Higher-quality merchandise and more profits to share in commissions would open up doors to more accounts."