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WASHINGTON - Former Minnesota U.S. Rep. Tim Penny wants the federal government to kill the dollar bill.
The Dollar Coin Alliance, a collection of mining and metal companies, mass transit agencies, unions and vending industry interests, has selected Penny as honorary chairman along with former Arizona Rep. Jim Kolbe.
The Washington, D.C.-based group wants to ditch dollars and switch to $1 coins, arguing that the move would save the nation billions of dollars.
There's at least one report that backs up the claim, but the proposal also has credible critics.
The Government Accountability Office (GAO) estimates that replacing dollar bills with dollar coins could provide $4.4 billion in "net benefits" to the federal government during the next 30 years.
A budget hawk during his days Congress, Penny admits the change wouldn't do much to chip away at the nation's current $16 trillion budget deficit. "To offer a pun, it's really small change," he said, "but it's an idea whose time has come."
Both dollar bills and coins cost less than $1 to make. The government makes a small profit each time a new dollar bill or coin is circulated into the economy by collecting the difference between the cost to mint the money and its face value.
To reach the $4.4 billion in benefits, the government would have to produce about 1.5 dollar coins to replace every current bill. That plan would only start producing savings after 10 years -- and there's more than half a billion dollars in upfront costs, mostly tied to minting more coins, the GAO report found.
James Miller, a former director of the federal Office of Management and Budget, argued that the rapid development of electronic payment systems could make dollar coins irrelevant by that time.
The House Committee on Financial Services convened the hearing, "The Future of Money: Dollar Sense," to review legislation and hear from officials with the United States Mint, Royal Canadian Mint and another pro-coin lobbying group, Americans for Common Cents.
But for many Americans, coin dollars don't make sense.
According to a 2011 White House report, the U.S. Treasury rolled back production of dollar coins last year because they're rarely used. At this time last year, nearly 1.4 billion dollar coins sat unused in Federal Reserve Bank vaults, which the Treasury estimates is enough to meet public demand for more than a decade.
That hasn't stopped the Dollar Coin Alliance from shelling out major coin to push anti-dollar bill legislation such as the Currency Optimization, Innovation and National Savings (COINS) Act. According to federal records, the group spent more than $650,000 on lobbying through the end of October.
For the dollar coin legislation to reach the House floor, two Minnesota lawmakers would likely have to offer their two cents. Reps. Keith Ellison and Michele Bachmann are both members of the Financial Services Committee, but so far neither has much to say. Ellison declined to comment; Bachmann's office did not respond to a request for comment.
During that hearing, Miller also said the effort could place a burden on businesses that would have to change their operations to handle heavier- and harder-to-transport dollar coins. "The notion of eliminating the dollar bill ... is quite absurd," he said.
Penny cites a poll conducted for the Dollar Coin Alliance in 2011 that found two-thirds of Americans support replacing the dollar bill when informed of the potential government savings. "I think it'll happen eventually," he said "we're just not there yet."
Corey Mitchell is a reporter in the Star Tribune's Washington Bureau.