- The Washington Times - Tuesday, April 11, 2000

Vice President Al Gore's favorite senator, John McCain, Arizona Republican, created a national following with his drive to reform government including a promise to eliminate wasteful government spending. He might start with the Treasury Department's latest campaign to sell you money.

As you may have noted, there is a new dollar coin in circulation. It's gold-colored and carries the likeness of Lewis & Clark's guide, Sacagawea. Wal-Marts have distributed them in change since January, and the Treasury Department has benefited from free media coverage from coast to coast.

So why is the U.S. Mint (part of Treasury) spending $40 million on the first stage of a Madison-Avenue blitz to sell you on your own money?

Because the American people, time and again, have expressed their clear preference for paper dollar bills over dollar coins. The Mint mistakenly believes it can buy a massive change of heart but I am convinced it cannot, no matter how much of our money it spends.

Of course, the Mint denies its sales pitch is costing taxpayers anything. In a recent address to the National Press Club, outgoing Mint Director Philip Diehl assured us that "not a penny of tax revenue has been spent on the $40 million advertising campaign."

Perfectly Clintonesque. Maybe the checks haven't yet been issued. And, yes, "tax revenue" is not at stake, since the Mint operates off a revolving fund (primarily profits from the difference between the cost of minting coins and their face value). Incidentally, those "profits" are ones the government credits to itself by virtue of its sovereign power to mint coins.

But in that same speech, Mr. Diehl said, "the profits that we earn [are returned] to … the American taxpayer." So, if outlays on advertising reduce [net] profits by $40 million (actually, more than $40 million as the campaign is extended), the taxpayer gets all those millions less. I don't know what kind of hay wagon they think we've fallen off of, but that sounds to me like this campaign is costing us taxpayers tens of millions of dollars any way you put it.

That settled, now ask yourself: How can this advertising blitz be justified?

Usually, an organization spends money on advertising to introduce a product or service (or to maintain its visibility and consumer loyalty). That could be the understandable goal for a first wave of dollar coin advertising.

But Mint officials say proudly that initial demand for the gold coin greatly exceeds expectations. So why are they ready to spend even more money on advertising? Could it be that they realize that acceptance has not really been won that the first wave of demand really is for a collectible and not for currency to use every day?

The real point here is that the Mint, and the dollar coin's supporters in Congress, want to avoid the disaster that befell the Susan B. Anthony dollar coin, which was demanded as a curiosity for a short time 20 years ago but experienced very limited circulation over the long term thanks to that long-running public preference for paper dollars. Lots of folks got egg on their faces with that one, and they don't want a repeat.

Early demand for the dollar coin should not be considered evidence it is or ever will be used widely as money. The Mint acknowledges that introduction of the new "collectible quarters" has increased demand for quarters from 2 billion to 7.6 billion this year, and the difference of some 5.5 billion is what the American public is collecting. These numbers suggest the figures being thrown around in the context of demand for the new gold coin (numbers far less than for the quarter) may indicate little more than demand to hold them as a curio rather than to use them as a medium of exchange. Even still, interested parties are floating the notion of eliminating the dollar bill altogether to force the American people to use the new gold coin whether they want to or not.

The market ought to be left to work. If people want to use the new dollar coin as a medium of exchange, that's fine. But they will make that decision on their own, based on their own convenience. The federal government should not insult us by telling us what money to spend and then heaping insult on injury by having us pay for a sales pitch.

Only the federal government would have the moxie to sell us our own money.

James C. Miller III, former budget director to President Reagan (1985-1988), is a consultant to the Save the Greenback Coalition.

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