First, note the
model's impertinent presumption that the taxpayer will always be in debt. To suppose that the government might operate
without debt is not only conceivable, it was deemed so likely in 2001, that the
Federal Reserve Open Market Committee held a special two-day meeting to discuss
what securities they should buy, when government bonds dried up. [5] Without debt, the face-value tax benefit could
not be palmed off as future interest saved by a reduced need to borrow. There would be no need to borrow to
reduce. According to the Fed's model, since
debt reduction is no benefit worth mentioning, then a surplus can be of no
benefit, else reducing the debt would be a benefit if only so as to eventually reach
a surplus.
More importantly, note that, after 30
years, $1.6 billion times 30, i.e. $48 billion in present dollars, will have
been credited to the Treasury's taxpayer checking deposit account, as
face-value tax payments. And an untold,
highly disproportionate part of this $46 billion would be realized in the initial
five year transition period. Whatever
the accounting techniques, it is a plain fraud on the taxpayer to exclude this
amount in reporting the "potential
government savings of replacing the dollar bill with a dollar coin."
No
GAO report would again leak these arresting face-value tax numbers, despite reporting
the interest relief from them as the only benefit.
Even
so the 2000 report managed
to blow it, presumably because it was hurried and informal, [6]
in the one-paragraph answer it gave to the small question of adding one billion
$1 coins to the currency. Here is that
paragraph, in full ( Financial
Impact of Issuing the New $1 Coin ( GAO/GGD-00-111R ),
page 2 (emphasis added):
"We
estimate that the net benefit to the government of issuing 1 billion $1 coins
this year will be $49.9 million.
According to the Mint, each dollar coin will cost an estimated $0.12 to
produce, leaving about $880 million in gross proceeds. From
gross proceeds, we subtracted $2.8 million of Mint start-up costs, $44.5
million of Mint advertising and promotion costs, and $0.4 million of Federal
Reserve processing costs, for net proceeds of $832.2 million for 1 year. Although the accounting and budgeting
presentations of the net proceeds differ, in
substance the $832.2 million net proceeds represent the amount of debt held by
the public that the government will avoid by issuing coins. At the current government long-term borrowing
rate of 6 percent, this represents an interest avoidance, or net government
benefit, of $49.9 million this year."
Note
the same farcically insubstantial "in substance" rationale that summarily
discounts the size of the tax. More
tellingly, note the passing characterization of the $1 billion face-value tax,
minus costs, as "net proceeds" that reduce the "debt held by the public." And most tellingly, note how the deducted
costs included the Mint's relatively tiny
start-up costs.
Returning to the 1990 report, contrast the
inclusion of all such initial costs
in the estimated benefits. As a matter
of fundamental integrity, if start-up costs
count, then so must be offsetting start-up
receipts.
Fraud on the taxpayer, intentional.
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