WASHINGTON--(concludes that replacing the dollar bill with a dollar coin would cost the federal government billions of dollars over time and proves no long-term savings.)--In a critical economic study released today titled “Keep the Greenback: Why Carrying Pockets Full of Dollar Coins Won’t Save the Country a Cent,” Patrick Fleenor, Chief Economist at Fiscal Economics, Inc.,
“The cost of producing coins for a full replacement is never fully recovered during the 30-year analysis.”
“Public policy should promote the general interests of society, not the parochial interests of government,” said Patrick Fleenor, author of the independent critical study released today. “Eliminating the dollar bill and replacing it with a dollar coin will cost American taxpayers billions of dollars in the long run. Let me be clear – based on my analysis, there are no long-term savings associated with a switch to the dollar coin.”
Supporters of a switch to the dollar coin and elimination of the dollar bill often cite a March 2011 report from the Government Accountability Office (GAO) predicting long-term fiscal savings for the federal government. However, upon examination, the GAO report’s analysis is incomplete and flawed in its conclusions. The economic study released today highlights two major inaccuracies -
The economic model employed in the GAO’s analysis only considered costs and benefits to the federal government and ignored the effects of the policy change on the larger society – i.e., the general public and businesses. The GAO did not take into account the effects on the private sector from replacing the dollar bill with a dollar coin.
What the GAO report counted as the benefit of replacing the one dollar note does not result from traditional cost savings – i.e., a longer lifespan. Indeed, as the GAO report admits, “The cost of producing coins for a full replacement is never fully recovered during the 30-year analysis.” Instead, the purported benefit results from the assumed ability of the federal government to replace the existing stock of $1 notes with 50 percent more $1 coins and count the difference as revenue – basically an accounting trick.
To view the entire report, “Keep the Greenback: Why Carrying Pockets Full of Dollar Coins Won’t Save the Country a Cent,” including an executive summary, please visit www.americansforgeorge.org and CLICK on “GAO Report Analysis.”