Legal Tender Modernization Act
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The Legal Tender Modernization Act (HR 2528) was a bill proposed by United States Representative Jim Kolbe of Arizona in 2002. Its main goal was to stop the continual production of pennies. The bill also mentions other provisions including:
- Allows the Bureau of Engraving and Printing to print postage stamps, currency, and security documents for foreign governments and U.S. states or political subdivisions in order to make foreign currency consistent with U.S. foreign policy.
- Five different new designs each year for the $2 Federal reserve notes
- Prohibits redesigning the $1 Federal Reserve Note, as the $1 Federal Reserve Note is not as inclined into being counterfeited therefore there is no need of a redesign
- States that the seigniorage (the U.S. government's profit earned from selling money to the Federal Reserve) should be included in the budget as a receipt
The bill failed to advance in either house and died when the 107th Congress adjourned.
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[edit] Criticism
Critics of the Legal Tender Modernization Act state that by eliminating the penny, the rounding system would increase prices that could hurt the consumer, especially the lower class. Kolbe however has responded to such criticism and has stated that the rounding system "favors neither the consumer nor the retailer because the probability of rounding up or down is 50 percent either way -- it would all come out even in the end."[1] Other common criticisms include profit, public demand, high prices, dependence on charitable causes, consumer confidence, historical importance, and the decrease dependence of copper.[2][3]
[edit] In popular culture
The Legal Tender Modernization Act and the arguments for eliminating the penny were featured in the 6th episode of the third season of The West Wing. A staffer of a member of the U.S. House of Representatives asked Deputy White House Communications Director Sam Seaborn to give the staffer's boss a reason to not support the bill. The answer was that the bill would never get to the House floor since the Speaker of the House came from Illinois and would never support a bill eliminating a coin featuring a picture of Abraham Lincoln, Illinois's greatest son.
