Experts say a transition to one-dollar coins would benefit state economy
Sen. Tom Harkin, D-Iowa, advocates replacing $1 bills with $1 coins — and Iowa economic experts say the state would benefit from the transition.
"Promoting the $1 coin is a smart investment for our country that saves taxpayer's money," Harkin said in a press release. "With the deficit looming, we need only look at the cost savings from this effort to understand why this legislation is so urgently needed."
Harkin and Sen. John McCain, R-Ariz., introduced the proposed switch along with a group of senators earlier this year. The proposal would cause the U.S. Mint to produce more coins, requiring more copper alloy from nationwide copper manufacturers, such as Iowa's PMX Industries in Cedar Rapids.
"The copper alloy [the U.S. Mint] uses is unique," said Tom Bobish, the PMX Industries senior vice president of sales and marketing. "The [U.S.] Mint has very tight specifications."
He said the production of copper alloy deemed suitable by the U.S. Mint requires a company with the proper equipment and technical knowledge to handle the material's tight chemistry and specific properties. PMX Industries is one of only two copper alloy producers in the nation to supply the U.S. Mint — the other is Olin Brass in East Alton, Ill.
Bobish said PMX Industries would see job growth if Congress decided to support the production of more $1 coins.
"It's undetermined how much more material would need to be produced, because Congress regulates the U.S. Mint," Bobish said. "But we'd grow in size, and there would be economic benefit to Iowa."
In 2005, Congress did pass the Presidential $1 Coin Act to increase the use of the $1 coin by producing a series of the coins with images of past presidents.
UI economic professors agree that Iowa economics would find the legislation favorable, given the PMX's copper production.
"Anytime you increase demand for a local product, you increase the welfare of the state," UI economics Professor Forrest Nelson said.
UI economics Visiting Assistant Professor Thomas Parker said the transition to $1 coins could even lessen personal spending.
"We all have a tendency to take change out of our pocket and leave it," he said, also agreeing with Bobish's assessment of jobs made through boosts to the copper industry.
And the proposed switch would also promote nationwide profit, government officials said. The Government Accountability Office, in a press release, estimated that the government would save more than $200 million per year in result of this transition.
Lorelei St. James, the acting director of the GAO Physical Infrastructure Issues, said that estimate came from considering seigniorage — the difference between how much it costs to produce coins and their face value — and comparing the life span of the coin and the bill. Coins last for almost 30 years, she said, while dollar bills last for roughly four-and-a-half years.
However, bill life spans are increasing slightly because stronger material and increased federal circulation time.
"As the life of a [$1 bill] gets longer, the benefit of switching to the $1 coin goes down," she said.
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