Fed Sits On A Billion Unwanted Dollar Coins

A billion dollars in dollar coins are stacked up in Federal Reserve vaults around the country because Americans don't want them. The dollar coin program has become a waste of money and space. Congress initiated the effort to promote presidential history and to build up interest in dollar coins as substitutes for bills. But the government wildly misjudged demand. And political sensitivities keep the program alive — even though some of its congressional sponsors acknowledge it has been a flop. Melissa Block talks to Planet Money's David Kestenbaum for more.

MELISSA BLOCK, Host:

Try to imagine over a billion $1 coins sitting in government vaults unused, a billion. Now, add to that pile about 200 million more dollar coins every year, wasting space and taxpayer money. That's the finding of an NPR investigation.

David Kestenbaum with our Planet Money team joins me to talk about it.

And, David, let's picture this: a billion dollar coins. Why aren't they being used, and why does the U.S. government keep making them?

DAVID KESTENBAUM: It's all due to a law that Congress passed in 2005. And the hope was that people would get excited about using dollar coins instead of dollar bills. The idea was we're going to mint a new series of dollar coins. We're going to put the faces of all the presidents on them. But it didn't really catch on, and the law says you have to do all the presidents. So we're busy marching our way down the list. We're at Ulysses S. Grant so far, which means there's still a long way to go.

And because the program is not catching on - it turns out the economy doesn't need all the coins that get made - so some end up in the vault that way. The other reason coins are piling up is this clause in the bill that requires the minting of millions of those Sacagawea coins, a previous attempt at the dollar coin, and even though we already have way more of those than anyone wants.

We've estimated the government is wasting about $300 million so far making all these coins that no one wants.

BLOCK: And, David, we heard in your report this morning on MORNING EDITION that you actually went to the vault to see these billion coins. What do they look like?

KESTENBAUM: Well, yeah, I went with Robert Benincasa, with our investigative team. We went to one vault where they had about 45 million coins, which itself is a lot. I've done the math. A billion coins really is Scrooge McDuck territory.

(SOUNDBITE OF LAUGHTER)

KESTENBAUM: You could fill a very large swimming pool with a billion coins.

BLOCK: Well, this all originated with Congress. What do the lawmakers who put this all together say about the surplus of coins?

KESTENBAUM: So there were three people who were key on the House side. One was Mike Castle, a Republican from Delaware. He is no longer in office, though. We talked to him, and he said he thought it was ridiculous and needed to be fixed.

We talked with Earl Pomeroy, Democrat from North Dakota, also not in office. And when I talked with him, he said maybe we should kill the program altogether.

EARL POMEROY: You know, in kind of private moments of truth, I don't really use dollar coins. And if I had one, I hope I don't spend this as a quarter somewhere and don't get my change back, and who's going to take the darn thing if I - is there a machine that will take the darn thing if I want a Coca-Cola?

KESTENBAUM: Carolyn Maloney, the Democrat from New York, worked on the bill. She is still in office but declined to comment.

BLOCK: But, David, was the idea sound in principle? And if we all switch to dollar coins instead of paper $1 bills, would it actually save money?

KESTENBAUM: You would think yes, right? Because coins last for decades, and paper bills wear out. But it turns out that paper dollars actually last a lot longer than they used to, and the metal to make coins is increasingly expensive.

Plus, there's this other thing, which the - if you're going to switch to coins, you need more coins than dollars because people let a lot of them sit around, you know, in their drawers and pile up in their dresser. And the economy needs a certain amount of dollars. So if you're going to switch to coins, you got to put extra out there to account for the ones people are letting pile up.

BLOCK: To account for the dresser factor.

KESTENBAUM: The dresser factor.

(SOUNDBITE OF LAUGHTER)

BLOCK: OK.

KESTENBAUM: And so the government reports - the most recent reports looking at this say, with today's prices, actually, bills are cheaper for taxpayers.

BLOCK: Well, David, what are people telling you about how the dollar coin program could be fixed?

KESTENBAUM: I think it's a pretty easy fix, but parts of the fix are politically fraught, like you'd have to eliminate the part of the law that requires the minting of the Sacagawea coins and taking a Native American woman off the coin, so you can keep minting a bunch of dead presidents. That's a tough sell.

BLOCK: OK. NPR's David Kestenbaum, with our Planet Money team, thanks so much.

KESTENBAUM: You're welcome.

Copyright © 2011 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.