It is NOT Illegal to Deface, destroy or mutilate Federal reserve notes. Its only illegal to do that if the intent is to defraud another and gain benefit from it. So go ahead and burn those Benjamins to light your Blunt, nothing illegal about it at all. Besides, the US Government does not issue dollars, a private corporation does.
(Text as of 2/19/02) 18 U.S.C. §331:
Whoever fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales or lightens any of the coins coined at the mints of the United States, or any foreign coins which are by law made current or are in actual use or circulation as money within the United States; or whoever fraudulently possesses, passes, utters, publishes, or sells, or attempts to pass, utter, publish, or sell, or brings into the United States, any such coin, knowing the same to be altered, defaced, mutilated, impaired, diminished, falsified, scaled or lightened - shall be fined under this title or imprisoned not more than five years, or both.