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NEAL APPLAUDS GAO REPORT ON BURDEN OF DOLLAR COINS ON BUSINESS AND GOVERNMENT

March 7, 2012
Press Release

Maintaining dollar note would prevent waste and help western Mass economy

(SPRINGFIELD) Congressman Richard E. Neal today applauded a recently published report by the Government Accountability Office (GAO) that concluded a transition to the $1 coin would cost the federal government $531 million over the first ten years and impose unnecessary costs on American businesses. A senior member of the House Ways and Means Committee, Neal has consistently fought to close tax loopholes to help the American taxpayer save billions of dollars. He has also worked save and create jobs in western Massachusetts. Crane & Co., which has produced nearly all U.S. currency since 1879, employs more than 850 workers in its Dalton facility.

Last week’s finding by the GAO reinforced policy changes made by the Obama administration last year. Citing excessive inventories, the Treasury Department suspended production of the coins in December 2011. Approximately $1.5 billion dollars in dollar coins are currently in storage at the Federal Reserve, unwanted by the American consumer. Suspension will also reduce the U.S. Mint’s expenses by $50 annually.

“I applaud the GAO for providing additional information on the fiscal drawbacks of the dollar coin. The American people have always preferred the dollar note over the coin. And we have now learned the Obama administration’s decision last year to curtail production of dollar coins will help save taxpayers millions of dollars. As a result, I see no good reason to switch from bills to coins. I also want to see those jobs at Crane Paper stay right here in western Massachusetts ” said Congressman Richard E. Neal.

As part of the GAO study on the disadvantages of the dollar coin, the Treasury Department cited excessive costs to American businesses as part of their objections. “The GAO has not considered the total cost associated with replacing the $1 note with the $1 dollar coin, including; transportation, production, environmental, and other costs,” said Treasury spokesperson Dan Tangherlini.

Federal Reserve official Jeffrey Marquardt also suggested the risks of counterfeiting were more significant for coins than dollars. “Unlike the $1 note, the $1 coin does not have any machine-readable or publicly-usable counterfeit deterrent features,” said Marquardt. He cited also specific examples of counterfeiting of the U.S. Sacagawea dollar coin in Latin American countries.

“The GAO, the Treasury Department, and the Federal Reserve have all spoken. The $1 coin is a fiscal loser. It is easier to counterfeit the $1 coin, and the transition costs of retrofitting our banking system to accommodate the dollar coin are too great. The risks associated with the $1 coin provide enough reason to shelve the dollar coin legislation proposed in the U.S. House last year,” Congressman Neal continued.

In 2011, Senator Scott Brown and Senator John Kerry introduced legislation entitled the “Currency Efficiency Act” (S.1624) to specifically address inefficiencies in the present currency system. Following the publication of the GAO report last week, Neal said he looks forward to working with his colleagues in Congress to “consider bipartisan legislation to put an end to waste in our nation’s currency system.”