When special interests and government bureaucrats get together, it is the taxpayer who gets no respect in the morning.
Take the dollar coin. A gaggle of interests wants to replace the paper dollar with a dollar coin. It is something that no one wants but them.
Vending machine companies have lobbied for it. Metal producers stand to benefit from coin production. And then there's the U.S. Mint itself, which makes coins, whose very existence may be threatened now that it costs more than a cent to make a penny and more than five cents to make a nickel. A dollar coin would justify its existence.
The only problem? Virtually every one likes the dollar bill and every attempt to replace it with a coin has failed since 1865. The latest failure: The U.S. Mint spent over $67 million on aggressively promoting the Sacagawea dollar coin between 1998 and 2001. How many are in your pocket right now?
The greenback's staying power is evident, and it's easy to see why. Coins are bulky and heavy. They end up in coffee cans or between sofa cushions. And they're just a nuisance to carry around.
It's frankly annoying to get 99 cents back when you use a fiver to pay for a sandwich that costs $4.01. Most people are begrudgingly satisfied with their nickels, dimes and quarters. But asking them to look at a dollar coin the same as a dollar bill is asking too much.
Some people claim the coin, with its long life span, would save money. Fewer bills to replace and so on. In fact, it's just the opposite. Today, there are roughly 8 billion one-dollar notes in circulation. Imagine replacing a tower of greenbacks 536 miles high. And replacing them would not be a simple matter of substituting a coin for every bill.
Based on consumer spending patterns, the U.S. Federal Reserve estimates that it would take at least two coins to replace each greenback. People tend to store coins in dressers or jars until they have enough to warrant a trip to the bank to change them into bills.
This may sound innocuous until you consider that the money in your piggy bank doesn't accrue interest. Some argue that switching to coins could allow Uncle Sam to "find" an extra $8 billion while avoiding around $400 million worth of interest. When the government borrows money, it pays 5 percent interest. So wouldn't it be better to just create money without that interest expense? Well, not really.
This government's windfall would be paid by the American public to the tune of $8 billion -- money sitting idle and interest free in our piggy banks. Taxpayers would have to pay thrice for the dollar coin: once to make it, again to promote it and third time in lost interest.
In an age in which electronic money transfers are beginning to peck away at the dominance of physical money, it's strange to see our government push for a currency form popularized by medieval monarchs. The dollar coin is a giant step backward.
Richard Miniter is a best-selling author and fellow at the Hudson Institute.