It was no secret, but once a National Public Radio report on the $1 billion in dollar coins taking up space in Federal Reserve vaults got the public’s attention in late June, talk has focused on what to do about it.
Asking the American public to spend them hasn’t worked.
Asking the U.S. Mint to quit producing them won’t work either, because minting of the coins is required by law.
So two lawmakers have introduced legislation to revoke the law that has required the production of Presidential dollars since 2007.
Lest anyone wonder about her intent, Rep. Jackie Speier, D-Calif., has titled her bill “Wasteful Presidential Coin Act of 2011.” Introduced on July 19, H.R. 2593 calls for termination of the Presidential $1 Coin Program.
On the same day, U.S. Sen. David Vitter, R-La., introduced S. 1385 to eliminate the program.
“Even though many in Congress, including myself, hoped that dollar coins would eventually save taxpayers money, it’s turned out to be one of those unnecessary and, quite frankly, wasteful programs that we should eliminate,” Vitter said.
The Presidential $1 Coin Program directs the U.S. Mint to produce $1 coins with portraits of U.S. Presidents on the obverse. Beginning in 2007, four coins a year were to be produced, honoring the Presidents in chronological order.
The intent was to inspire the American public to spend the new $1 coins, because folks hadn’t exactly warmed up to using the Sacagawea dollars that had been in circulation since 2000.
But to make sure the Sacagawea dollar will still be minted, the law requires that one-fifth of all $1 coins produced be Sacagawea coins.
So what effect would elimination of the Presidential $1 program have on the Mint?
“A significant amount of seigniorage we would have to consider would be in jeopardy,” said Tom Jurkowsky, Mint director of public affairs.
It costs the Mint about 32 cents to produce a Presidential dollar, which it sells at face value to the Federal Reserve for $1. The 68-cent margin the Mint makes on the transaction is the seigniorage.
But chances are the Mint would make up some of the seigniorage loss with increased production in quarters, but demand for that denomination is currently depressed.
The final decision is in the hands of lawmakers.
“Whatever we do, make, produce – whether circulation coinage or medals – it’s all directed by Congress,” Jurkowsky said. “We will do whatever we are told to do.”