To: National Circuit
Contact: Mark W. Weller or Matthew J. Eggers, Americans for Common Cents (www.pennies.org); (202) 312-7426
July 18, 2006 — Legislation was unveiled today in Congress that seeks to eliminate two fundamental cornerstones of the United States monetary system — the one-cent coin and dollar bill. “This legislation is bad for Americans and bad for our money system,” said Mark W. Weller, Executive Director of Americans for Common Cents. “You don’t legislatively ban the two most recognized and historic parts of our currency for no compelling reason” Weller added.
The so-called “COIN” Act (H.R. 5818) is sponsored by Representative Jim Kolbe, a Republican from the Eighth Congressional District of Arizona. The legislation would force merchants to round transactions to the nickel, which is something Americans abhor. Sums ending in 1, 2, 6 or 7 cents would be rounded down and sums ending in 3, 4, 8 or 9 cents would be rounded up.
Americans for Common Cents — a broad-based coalition of more than 40 organizations dedicated to keeping the penny a part of the nation’s coinage system — opposes the bill. Kolbe’s bill is a virtual repeat of legislation he introduced five years ago that received no support. Not one of the 435 Members of Congress joined Kolbe in 2001 as a cosponsor. “Most lawmakers understand that a strong majority of Americans — approximately two-thirds (66%) according to a recent national poll – want to keep the penny” Weller added.
The alternative to the penny is rounding purchases to the nickel — a real loser for consumers. Research by Penn State University economist Raymond Lombra shows consumers will be affected by a $600 million “rounding tax” every year under the Kolbe bill. The Lombra study suggests that a majority of typical convenience store transactions would be rounded up and lead to higher prices, according to Weller. “This discriminatory ’rounding tax’ would be regressive, affecting the poor, who rely on cash purchases” he added. According to the Treasury Department, more than 10 million unbanked Americans do not have accounts at mainstream financial institutions and penny elimination would further harm their financial well-being, Weller cautioned.
Kolbe’s bill represents special interest lawmaking at it worst. In addition to eliminating the Lincoln penny, Kolbe’s bill seeks to prop up a new $1 coin to be introduced in 2007 by phasing out the $1 note or Greenback. Supporters of the $1 coin want to get rid of the Greenback because history has shown that the $1 coin won’t succeed while the $1 bill is in circulation. Also, replacing the Greenback with the $2 bill, as the legislation suggests, will not work. Americans have never embraced the $2 bill and it has never circulated successfully.
The federal government’s experiences with the metric system and both the Susan B. Anthony and Sacagawea dollar coins suggest that changes imposed without the public’s consent will fail miserably. There is no pressing need to eliminate the penny — especially during times of high gas prices and growing inflation. “Americans — from consumers to charities — want to keep the penny. The Kolbe bill is bad legislation that will be rejected by the American public,” Weller said.
Americans for Common Cents is a broad-based coalition of business, numismatic and charitable organizations dedicated to keeping the penny in circulation. The coalition was formed in 1990 in response to Congressional threats to eliminate the one- cent coin.