POLITICS

For Gephardt, it's all about the Washingtons

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Politics,Beltway Confidential,Timothy P. Carney

Is the fight over the future of the dollar -- embodied in the COINS Act -- all about tradition and American exceptionalism (preserving the paper dollar?) versus change and budget savings (abolishing the paper dollar for dollar coins)?

No. This is Washington, so every policy is a fight among the companies whose profits hang in the balance.

Here's a Huffington Post article defending the paper dollar by Randy DeCleene of "Americans for George." Guess who funds "Americans for George"?

  • The armored car industry, which would burn more fuel trucking around coins than dollars.
  • Vending-machine makers
  • Companies that make bill-counters and sorters, like CashScan
  • And fo course, the guys who make the paper.

Crane & Company makes the paper on which the U.S. Mint prints your dollar bills. This month, Crane & Co. hired the Gephardt Group, founded by former House Minority Leader Dick Gephardt, to lobby against abolition of the paper dollar.

Of course, the metals industry is lobbying to kill the dollar. Global Brass & Copper, in its IPO registration statement, noted the following as part of their "Growth Strategy":

Transition to the Dollar Coin. On September 20, 2011, the Currency Optimization Innovation and National Savings Act, or “COINS Act”, was introduced in the U.S. House of Representatives, which is intended to modernize the U.S. currency system by replacing $1 notes with $1 coins and result in average savings of $184 million per year (based on 2011 Government Accountability Office estimates). Despite a recently announced substantial reduction in $1 coin production over the next couple of years, we anticipate a significant increase in the size of the coinage market if the U.S. transitions to the $1 coin and eliminates the dollar bill. In addition, increased demand for coinage represents a key potential source of growth for our company.

There's not necessarily anything insidious going on here. Government makes money, and depending on how they do it, somebody is going to make money off it -- and those companies have every right to make their case. In fact, they shouldn't necessarily be ignored, because the paper and the copper industries will know better than anyone else, the ins and outs of paper and copper currency.

The lesson here is this in nearly every fight in Washington, the strongest forces are typically those who stand to make or lose money off of government's decisions.

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