In its penny-pinching quest to erase the national deficit, the U.S. government could turn to coins.
The Government Accountability Office says the United States should replace $1 dollar bills with coins to save money, according to the Associated Press. The GAO released its latest study on the benefits of replacing $1 bills with coins and found doing so could save the government $4.4 billion over the next 30 years. Some of the savings can be attributed to coins' superior longevity — a dollar bill lasts about 4.7 years, while a coin would last 30 years, according to the GAO. The rest is due to increased seigniorage, which is the difference between the cost of making coins and their face values.
The first few years of the transition would be costly, as printing machines and other infrastructure would be changed. But eventually, the savings would outweigh the transition costs.
The study comes ahead of a report that the U.S. Mint has prepared for Congress which details the potential cost savings of changing the metal content of coins. In 2010, Congress passed the Coin Modernization, Oversight, and Continuity Act that requires the Treasury Department to present the House Banking committee and Senate Banking, Housing and Urban Affairs committee with a report analyzing the costs and possible changes of producing coins every two years.
At a Thursday hearing on the subject, the GAO recommended to the House committee that the U.S. should consider using less expensive metals in coins, such as steel, aluminum, and zinc. The recommendation also pushed for replacing dollar bills with coins, despite the lack of public popularity.
"GAO continues to believe that replacing the $1 note with a coin is likely to provide a financial benefit to the federal government if the note is eliminated and negative public reaction is effectively managed through stakeholder outreach and public education," the GAO's recommendation reads.
In the past half-century, several countries have replaced low denomination bills with coins with positive results, the GAO contends.
"The Canadian government, for example, saved $450 million (Canadian) over 5 years by converting to the $1 coin," its report claims. "Canada and the United Kingdom found that stopping production of the note combined with stakeholder outreach and public education were important to overcome public resistance, which dissipated within a few years after transitioning to the low denomination coins."
The U.S. Mint has already made 2.4 billion $1 coins over the past five years, but production was suspended about a year ago. The Sacagawea dollar coin was initially cheered when introduced in 2009, but it never really stuck and usage rates have since fallen.
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Seth Cline is a reporter for U.S. News & World Report. You can follow him on Twitter or reach him at firstname.lastname@example.org.