U.S. Reps. Shelley Berkley, Jim Gibbons, and Jon Porter all voted on April 27 with the majority in favor of a presidential coin series. Berkley is a Democrat; Gibbons and Porter are Republicans.
The measure was House Resolution 902, providing for creation of a new dollar coin. Unlike the Eisenhower, Anthony and Sacajawea dollars, which were considered failures because they did not circulate well in the money supply, the presidential dollars are more or less designed to fail. Officials hope that, like state quarters, many presidential dollars will disappear into drawers and jars and collections and not make it into cash registers. The idea is that it costs only a few cents to mint a coin and each one that disappears is “profit” for the government. The state quarters proved to be a bonanza for the federal treasury, since many people received them but never spent them.
There’s actually a word for this scam—seigniorage, defined by Investopedia.com as “revenue [generated for] a government when the money that is created is worth more than it costs to produce it. This revenue is often used by governments to finance a portion of their expenditures without having to collect taxes.”
Four coins a year would be released as part of the presidential dollar series, each with a different president on the obverse. The Senate version of this measure is sponsored by Republican John Sununu and Democrat Harry Reid.
There is precedent for the planned failure of the presidential dollars—the unplanned failure of the Kennedy half-dollar. Until 1964, half-dollars were popular and circulated well. When the Kennedy half was released in that year, just months after President Kennedy’s assassination, people took them out of circulation for keepsakes in such heavy numbers that the common usage of half dollars declined and never recovered.
U.S. Mint analyst Alan Goldman, who studied the failure of the Anthony dollar, concluded that there was only one way to make a dollar coin succeed—get rid of paper dollars. This would represent a huge savings (coins last about 30 years, dollar bills less than two), but there’s no likelihood of that happening if the presidential dollars series becomes a reality, since paper dollars will be needed to help the coin dollars fail.