Just spent the whole day at the Renewable Energy Conference at the convention center. It was interesting, and huge — loads of people there — and I’m not going to write about it right now because there was just too much to take in. Maybe later.
What I’m going to write about is these two Ulysses S. Grant coins that came into my possession, suddenly and without warning.
The free parking lot was full at the convention center — not only was this conference well-attended, but the bar exam was being given downstairs. So I had to park in the city’s for-pay parking garage across the street, attached to the Hilton. When the conference ended a little after 4, I paused to chat with Rep. James Smith, who had come in for a free beer at the post-conference reception (hey, I call ’em like I see ’em, James), then I headed for the parking garage, where I find myself in a horde of wrung-out would-be lawyers who had just finished the biggest exam of their lives. I told them they have my sympathy, because as one of them pointed out, “Now the waiting begins.” I lived through that with my daughter.
I’m giving you too much detail, right? Well, that’s because I haven’t blogged all day.
So I get to the parking garage, and have to wait in a crawling line to get out, and then I pull up to the machine, stick in my ticket, and it tells me I have to cough up $8 or I’m not going anywhere (which kind of makes me think, as I type this, I would have been better off parking on the street and getting a $7 ticket). So I feed in two fives, and then I notice that the change dispenser is coin-sized. I just had time to think, “Does that mean they’re going to give me dollar coins?,” when the two objects above fell out.
These are the first I’ve seen. I think. Maybe I saw one of the Washington ones, and thought it was a funny-looking quarter. I was right away puzzled that these had Ulysses S. Grant on them. We’re to Grant already? I mean, I would think it would take longer than this if we were going chronologically, and if we’re going by favorites or something, I’m not sure Grant would even make most people’s list. Great general, lousy president.
In any case, what really strikes me is how phony and illegitimate these things look — I mean, aside from the fact that, like their Women’s History predecessors, they are about the size of quarters. They’re made of chintzy material and look really cheap. I could be wrong about this, because I don’t have any handy to compare, but I think the tokens you get for playing video games at the arcade at Garden City are heavier and look like they’re made from a higher-quality metal.
And that’s what these look like — cheap tokens. Like those aluminum medallions you used to get, also at the arcade, from a machine that would stamp your name on them.
But apparently, they are NOT cheap, at least not to us, the taxpayers. I heard a report on NPR a couple of days back that made these things sound like a bad deal indeed. Check this out:
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…
It gets worse. Check this followup:
DAVID KESTENBAUM: One strange twist to the story was that some people had been using the Mint’s dollar coin mail order program to get free frequent flyer miles. Tim Brooks just got back from a trip to Hawaii, all on miles, thanks in part, to the U.S. Mint.
Mr. TIM BROOKS: The round-trip flights for me, my wife, and my son, four nights in Maui in a condo, and then the inner-island flights between Maui and Kauai, five nights in Kauai at a condo, and then two nights at one of the nicest hotels on the island there.
KESTENBAUM: You just order the coins with one of those credit cards that gives frequent flyer miles. The mint pays for shipping and when the coins arrived, you could just deposit the coins and use the money to pay off your credit card. Free frequent flyer miles. Brooks said he tries to spend the coins he gets.
On Friday, the mint announced it would no longer allow people to order coins with credit cards. Tom Jurkowsky, a spokesman for the mint, said it’s clear some people are just depositing the coins at the bank.
Mr. TOM JURKOWSKY (Spokesman, U.S. Mint): While this is not illegal, it’s a clear abuse and a misuse of the program.
KESTENBAUM: Jurkowsky said the program was intended for collectors or small businesses: car washes, laundry mats, or regional banks. The mint did try to address the frequent flyer problem a couple of years ago, he says, by limiting the number of coins people could order.
Mr. JURKOWSKY: We felt that that would solve the issue, and it obviously didn’t, and this should do it.
At least Tim Brooks had found a use for the things.
So anyway, they plugged that loophole that was encouraging abuse. But the coins are still being made, and still piling up. NPR went on to speak with a lawmaker who is trying to do something about it:
KESTENBAUM: The Mint has sent out 284 million dollar coins through the mail since the program began. The reason the mint has been trying so hard to get the coins out there, and the reason so many coins are piling up, is the law Congress passed in 2005: the Presidential Dollar Coin Act. The way the law is written, it basically forces the Federal Reserve and the Mint to make more coins than the economy needs. Representative Jackie Speier, Democrat from California, has introduced a bill to fix the program. The best way to fix it she says, by killing it.
Representative JACKIE SPEIER (Democrat, California): It was a grand experiment. It didn’t work, so it’s time to accept that fact and move on.
KESTENBAUM: You’re a Democrat. This would mean that the government would never make FDR coins or coins with Kennedy on them.
Representative SPEIER: Well, as painful as that is, the fact of the matter is that most of those coins would sit in vaults across this country.
KESTENBAUM: Speier says she’s only seen a presidential dollar coin in circulation once or twice.
Representative SPEIER: I only recall, vaguely, having this coin in my hand one day, thinking is this really a quarter, and then trying to use it in a meter — a parking meter — and finding out, not only didn’t it give me 25 cents worth of time, it gave me nothing.
I like that anecdote at the end. What are we supposed to do with them?
Don’t get me wrong. I think we should go to dollar coins. We just can’t seem to make any that anyone has any use for.
I thought it was awesome being able to use one and two-pound coins for all small transactions when I was in England. And they were good-looking coins, with a nice heft to them. The one-pounders aged well, taking on a nice, dull nickel-like finish over time that felt comfortable and reliable. They were coins you could respect. They didn’t look like they were recycled from Christmas-tree tinsel.
Why can’t the U.S. Mint make something that looks good, that feels good in the hand, that can be distinguished from other coins while still in the pocket, and that the American public would actually prefer to the dollar bill? Does no one in that organization know anything about design?
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When I’ve gotten these modern dollar coins as change in the past, I’ve given them to my eldest granddaughter. I don’t think she was impressed…
You should have told those would-be lawyers that if they pass, that they’ll be fortunate to find a job earning $30,000 and have to put in 3000 hours a year as a grunt associate.
The flip side of this “coin” problem is the penny. That is a completely useless piece of metal that just seems to pile up everywhere: in drawers, cups, cupboards, ashtrays. Yet they are so cumbersome to use. Can’t we just stop minting the things and round to the nearest nickel.
@Stephen Davis: No firm requires 3k in billable hours while paying $30k. You’re way off base on both numbers. As for the “waiting” afterwards, Brad’s daughter is absolutely right. That’s actually the worst part. The results don’t come out until near Halloween.
On the more interesting topic of the coins, I think everyone agrees that dollar coins are a good idea, However, for some reason, people aren’t warming up to them. I would probably carry a few (maybe), but the coins won’t carry as conveniently as paper, (as noted above) most machines don’t take them, and they don’t seem well-designed.
As for the government minting coins at a furious rate despite lack of actual demand…it would be funny if it wasn’t so typical of government to have a good idea in theory, have nobody actually want the program once it’s put into place… and then keep the program going anyway even though it’s a waste.
One idea for using the coins: When it comes time to make the interest payments on the debt to foreign investors, maybe we can send the boys in China a boatload of ’em.
Maybe I’m missing something. Why are dollar coins a good idea?
@Bryan – Why do I hear more and more recent law school graduates complaining about either not being able to find jobs or jobs that pay barely enough to cover living expenses? I know of one who is in family law who was happy to land a job at $40K after a year of waiting for someone to give her an offer. And she graduated somewhere around the top 25% of her class. Two of her friends are still unemployed and graduated in 2009.
With the economy the way it is, more and more college graduates are staying in school for graduate or law school. There is a glut of law school graduates right now and if you don’t graduate in the top 10% of your class the major players won’t even look at your application or resume. Add to this the fact that USC is a Tier 3 law school, graduates can plan on a sitting at a metal surplus desk in a strip mall over the highrise corner office.
I gave a tour/lecture the other day to a church group, and afterwards they all tipped me (you can’t stop them) with these coins. I thought they had chocolate inside.
Next time, see if you can get some tokens from Jillians and see if they’ll work.
@ Steven–it’s the either/or part of it–you can get reasonable hours or good pay, but not both.
Canada’s been getting along fine with dollar coins for 20 years. Two key differences between them and us, though: They got rid of their $1 bills and their $1 coins are reasonably attractive, not like the monstrosity that US’s latest series has turned out to be.
I think the getting rid of $1 bills is the real trick–most people don’t notice coins after the initial design…