COINS Act Seeks 1c Coin and $1 Note Elimination; 5c Composition Change

by Mike Unser on April 12, 2017 · 20 comments

US nickels

New legislation takes aim at eliminating the penny, replacing dollar bills with dollar coins, and changing the metallic make-up of nickels

Legislation reintroduced in the U.S. Senate seeks to save taxpayers money by suspending production of the 1-cent coin, changing the 5-cent coin’s composition, and replacing $1 notes with $1 coins.

Numbered S.759, the Currency Optimization, Innovation and National Savings (COINS) Act of 2017 was introduced by Sen. John McCain and Sen. Enzi on March 29, 2017.

"With our country facing $20 trillion in debt, Congress must act to protect the American taxpayer," Senator McCain said in a statement. "By reforming and modernizing America’s outdated currency system, this commonsense bill would bring about billions in savings without raising taxes."

10-Year Suspension of 1-Cent Coin

In the U.S. Mint’s FY 2016 Annual Report, the agency said that it costs 1.5 cents to strike and distribute each 1-cent coin. The nation’s smallest denominated coin has been a money-loser for 11 straight years.

The COINS Act would suspend their production for circulation for 10 years and pave the way for their elimination by requiring a GAO study to determine the effect of the suspension and whether it should remain in place.

The legislation carves out an exception to the suspension, enabling the coin’s production to fulfill the needs of numismatic collectors.

Change 5c Composition

The same U.S. Mint annual report said it costs 7.44 cents to produce and distribute every 5-cent coin. Similar to the cent, the nickel has lost money for 11 years in a row.

Five-cent coins are composed of 25% nickel with the balance copper. The COINS Act directs the U.S. Mint to make them from 80% copper and 20% nickel, and provides a provision to increase their copper content further.

Before any composition changes could happen, there are requirements that they must save taxpayers money and have no impact on the public or on stakeholders (like vending machine companies).

Replace $1 Notes with $1 Coins

Finally, the COINS Act would replace $1 Federal Reserve notes with longer lasting $1 coins.

"It is well-documented that replacing the dollar bill with a dollar coin would save taxpayers billions of dollars, and also be good for consumers, businesses, and the environment," said Tom Schatz, President of the Council for Citizens Against Government Waste (CCAGW).

According to a GAO study published in 2011, median lifespans are 40 months for notes and 34 years for coins. The same report estimates costs at 2.7 cents per note compared to 15 cents per coin. The GAO’s analysis concluded that replacing the $1 note with a $1 coin could save taxpayers approximately $5.5 billion over 30 years.

"The Council Citizens Against Government Waste has been advocating for the dollar coin for many years and we welcome the introduction of the COINS Act by Senators McCain and Enzi," Schatz added.

Beginning 2 years after its enactment, $1 notes would no longer be printed aside from numismatic purposes, and Federal Reserve Banks would remove them from circulation for destruction. They would remain legal tender currency.

Bill’s Status

S.759 has been refereed to Senate Committee on Banking, Housing and Urban Affairs.

For it to become law, it must pass in the Senate and House and get signed by the President. Similar versions of the bill have been introduced in prior sessions of Congress but they died from inaction.

{ 20 comments… read them below or add one }

Seth Riesling April 12, 2017 at 10:06 am

Two week old news here published March 29 by Better late than never!


M YF April 12, 2017 at 10:42 am

The coins need major overhaul, none of them with the exception of the $1 coin is fit for purpose anymore.

The 5 and 10 cent coins need to be produced in copper-plated steel and comparable in size to their respective values, the 25 cent or quarter needs to be re-issued as a coin comparable to the Dollar coin along with a practical and usable 50 cent coin – also in comparison to the Dollar coin and the Mint needs to explore the issue of a practical $2 coin.

Change seems to never take place with circulation coins, if you have one of each of the regularly circulating coin in you pocket, it adds up to just 41 cents, not even enough to make a telephone call on a public phone or take the bus.

If you have one each of the regularly circulating coins in the Euro-zone for instance, you have €3.85 or in Canada, at least $3.40 so there needs to be a real overhaul or “re-think” of US coins which would indeed save the taxpayer alot of their money. I hope there is real movement soon.

Richard April 12, 2017 at 11:09 am

Good ideas and I like the way they will keep cents for proof and mint sets (and perhaps selling in bag lots like halves?). We really could easily get by with just a nickel, dime, and quarter, but overcoming inertia to change is hard (can anyone say “metric system”?). Getting rid of the cent is logical, given how its value has steadily decreased, but I doubt if any US government wants to admit this way that the money is worth less. After all, the shrunken Anthony dollar was derisively called the “Carter quarter”.

Still, it would be a good time to redo designs that have become very creaky. There have been stupid fights in–where else?–Congress over the political parties of presidents on coins. So maybe it would be best just to go back to some sort of Liberty representation. Or we could wait until everything is paid electronically and stamps, coins and notes are just historical curiosities.

michael angiolillo April 12, 2017 at 11:11 am

I think it’s a great idea. It would be better if a new $1 coin would be art like it used to be.

Ernesto April 12, 2017 at 1:07 pm

Unfortunately special interest groups will end up killing these proposals & nothing will change.

jim April 12, 2017 at 1:23 pm

I’m surprised an old fogey like John McCain would sponsor this kind of bill but glad to see it and that something might be done about the penny and $1 bill.
Don’t understand the 10 year suspension on making the penny nor the continued production of the penny for numismatic purposes. Canada no longer mints pennies at all and their collector coin sets haven’t suffered at all. Speaking of Canada at least when they stopped making the penny they provided a solution for purchases that ended in the odd cent whereas this bill makes no suggestion about what to do when making change for a purchase that today would result in using a penny or two.

Chas Barber April 12, 2017 at 1:29 pm

In order to help business the Executive Branch proposes if pa$$ed all transactions will just be rounded up to the next dollar……seriously about time, but the vested mining etc., lobbyists will be out against this like a Chicago Aviation Security Team……what a drag

a Bob April 12, 2017 at 4:36 pm

These proposals are a little more popular each year. If they just add a provision to increase the two dollar bill production, it could get by the lobbies.

Robert F Hall April 12, 2017 at 10:47 pm

Anxious to see who will be on the Dollar coin?

Scott the Robot April 12, 2017 at 11:26 pm

Trump agreed not to veto this bill as long as his face was placed on the new nickel, dime, quarter, $1 and $2 coin.

Clifford Johnson April 13, 2017 at 3:19 pm

As ever, this article cites cost savings that completely ignore the $1 public debt reduction that accrues to the US Treasury from issuing each $1 coin. (There is no countervailing public debt increase due to $1 federal reserve notes being withdrawn, since they are issued by the twelve privately-owned federal reserve banks.) As a result, the benefits to the government over the same (30 year) period, based on the same production schedules, are some $50 billion more than the given estimates.

Clifford Johnson April 13, 2017 at 3:28 pm

Ideally, the $1 coin should be redesigned, to match the size of the eliminated penny. Although pretty, the bulk of the $1 coin renders it inconvenient.

Lee April 13, 2017 at 4:09 pm

The penny is a loser – yes.
But elimination of thie bill will cost everyone reading this more money as a whole. The government studies do not cover the realities of increased costs to consumers that happen in the real world.

Yes – taxpayer money is saved THEORETICALLY and ON PAPER to look good for politicians. But the reality is that, just like when Canada eliminated one dollar bills, the costs to consumers on a daily basis rise from two main occurences:

1. When the dollar “psychologically” becomes the “new quarter,” retailers take advantage of this and jack up prices. It DID happen this way in Canada when their one dollar coin was introduced. I was there.
In fact the dollar coin aided the inflation rate enough that their dollar soon became trivial enough Canada introduced a two dollar coin. And, BTW, the news releases of those days show the Canadians felt forced into something they did not want.

2. The costs from large service providers such as banks, and those companies who deal with major amounts of change like vendors WILL rise in cost for the consumer b/c, as the Canadian bank told me back then, it costs a LOT more to ship 1,000,000 of coins instead of 1,000,000 in bills. So they pass the cost increases on to consumers.

Even small time venders will have to deal with weight and space inconvenience.

Its about the consumers giving up CONVENIENCE and paying more for daily services. Its not about politicians saying they can save taxpayer money.

If they really cared about saving taxpayer money – they never would have approved the making of the presidential dollar series since history shows EVERY dollar coin in US history was not accepted by the general populace who want bills for convenience sake. Now that they have egg on their face once again, and the dollar coins are sitting, unused in government vaults (as all previous dollar coins did), some politician is seeing a way to say he can save taxpayer dollars ad not tell the facts its all politics and will cost us more.

Here is my “I told you so,” ahead of time. History will repeat itself if this ridiculous law to eliminate dollar bills is passed. You WILL be paying more for everything.

Munzen April 13, 2017 at 7:02 pm

The COINS Act conspicuously ignores the fact that every other country which replaced its $1 (or equivalent) bill also has a widely-circulating $2 denomination. Having both denominations greatly simplifies change-making AND negates the standard “pocket full of $1 coins” objection of the naysayers – any dollar amount less than five bucks can be given with at most two coins instead of the four needed in its absence.

Ideally a $2 coin should be introduced at the same time as the $1 bill is ended. It should be small and distinctive, perhaps multi-sided and/or bimetallic. However given the politics surrounding ANY “change to our change”, it might be more palatable to follow Canada’s course and simply increase $2 bill production for several years until the $1 coin has established itself. While continuing to print lower-denomination notes wouldn’t save the Treasury as much as eliminating everything less than $5, with $1 notes making up roughly 45% of the BEP’s output simply cutting that number by half would be a major improvement.

Clifford Johnson April 13, 2017 at 10:09 pm

The $2 coin could be cent-sized.

Munzen April 14, 2017 at 8:56 am

“The $2 coin could be cent-sized”
Definitely, although there’d have to be enough differences to avoid confusion, not to mention re-use of old 1¢ coins. The Australian $2 coin is a good example that a small, higher-denomination coin can be successful. It’s 20.5 mm in diameter (very close to our cent’s 19 mm) but has a distinctive thickness and color.

joera April 16, 2017 at 5:59 am

This has been in the talks for a while now. Maybe it WILL happen this time. And maybe it would be a good time to put the half dollar back into circulation. But why would it be a 10 year period before it is all said and done.

JB April 21, 2017 at 3:39 pm

The $5.5 billion savings over 30 years will never even be noticed the way our government goes through money. The savings per year would be just over 183 million, which in government terms is almost nothing. Sure the mint will save but it will be spent somewhere else.

Clifford Johnson April 21, 2017 at 3:46 pm

As my previous comment states, the actual savings would be ten times the GAO’s estimate, owing to the GAO’s failure to incorporate the Treasury’s $1 per $1 coin debt reduction.

Steve Gonzales June 6, 2017 at 7:17 pm

There is such a glut of pennies out there does not make Sense (cents) to be producing them! Especially since we are loosing money. Hopefully President Trump will pass this bill reducing the deficit was his plan! Great Work Sen. Mcain. Hopefully the lobbyists will not have the power to block.

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