WASHINGTON -- The greenback could be in for a color change under plans being considered in Congress and other government circles.
Legislation now before the Senate would order the Treasury Department to study the possibility of changing the color or size of U.S. currency to thwart drug dealers and money launderers who are draining the nation of billions of dollars annually.
Donald Regan, who was treasury secretary and White House chief of staff during much of the Reagan administration, is a strong backer of the concept, and the Drug Enforcement Administration is actively pursuing such a plan.
'I believe it would be devastating to the drug traffickers,' said Sen. Alfonse D'Amato, R-N.Y., who introduced the money measure in the Senate. 'You can't just do business as usual. They've been beating the system.'
D'Amato's measure is part of broader legislation cracking down on money laundering that was approved in July by the Banking Committee and headed for action by the Senate. The study would focus on the possibility of altering selected denominations of U.S. currency or only U.S. currency in circulation in foreign countries.
'You've got to use every weapon you can to stop drug traffickers,' Regan said in an interview. 'To me, the reason that most people go into selling drugs and dealing in drugs is the profit motive. Anything that you can do to interrupt that profit chain has to interrupt the drug chain.'
Regan estimated that the U.S. 'underground economy' of drug money, organized crime profits and other 'off-the-books' income is about $300 billion annually, meaning the government is being deprived of about $100 billion in taxes per year.
The change would be unprecedented. Paper money has been green throughout U.S. history, according to the Bureau of Printing and Engraving. The last major design change came in 1927 with a size reduction and standardization of artwork.
The logic behind the proposal is simple: Virtually all sales of narcotics are conducted in cash, even wholesale transactions that involve millions of dollars.
Due to restrictive currency control laws in the United States, major drug trafficking organizations must export their illegally gained money, often by smuggling, to be deposited -- 'washed' or 'laundered' -- in a bank in a country with weak or non-existent currency controls.
The DEA has proposed to Treasury officials that the government print two forms of currency, one as legal tender exclusively inside the United States and one as legal tender exclusively outside the United States, said David Wilson, who heads DEA's anti-money laundering efforts. The two forms would be interchangeable only at a U.S.-controlled financial institution, meaning drug traffickers could no longer exploit weak currency control laws in foreign banks and smuggled money would be worthless.
'I hope it will make the American drug market an additionally unfriendly environment and it will cause traffickers to say, 'You know, why don't we sell our dope someplace else,'' Wilson said. 'They have it their own way now by being able to go overseas. I want home-court advantage. It's as simple as that.'
Regan's idea is slightly different and would target illegal cash holdings by drug dealers, tax evaders and other criminals. Regan argues that the government should print $20, $50 and $100 bills with a new color on one side and, with a warning of about 10 days, declare the old bills no longer acceptable as legal tender.
As Americans exchange old bills for new, banks would keep a record of exchanges over $1,000, with the information forwarded to the Internal Revenue Service and other federal agencies. That would mean that those possessing large amounts of cash would either have to legally declare it or swallow it.
'From my point of view, you have to do something sudden and dramatic,' Regan said. 'To change the color only on one side, I think, would do it. Why bother with both sides? You'd still have the so-called greenback. But you might have a yellow face. Or you might have a green face and a yellow back. This doesn't have to be one hue. It doesn't have to be just pink or just blue. It could be a mixture of colors.'
Regan acknowledged that his plan would inconvenience millions of Americans.
'On the other hand,' Regan said, 'I think all of us are in this drug fight and in this fight against crime and in this fight against tax cheaters. To be inconvenienced by having to take whatever stash of bills you have to get them exchanged at the bank isn't all that great a deal.'
Regan said the idea seems radical because Americans are so accustomed to green money, but he pointed out that the currency of many nations is multi-colored. Regan said he first discussed the plan privately when he was treasury secretary in 1981 but that the idea was resisted by agency officials who called the idea 'just dreaming, fanciful and not realistic.'
'I say this thing is not that complicated,' Regan retorted. 'If we can design computers, if we can send a man to the moon, then we can certainly come up with a change in the color of a bill without creating too much of a stir.'
