Congress considers return to steel pennies, nickels BY LAURIE KELLMAN The Associated Press
WASHINGTON — Further evidence that times are tough: It now costs more than a penny to make a penny. And the cost of a nickel is more than 7 /2 cents. Surging prices for copper, zinc and nickel have some in Congress trying to bring back the steel-made pennies of World War II, and maybe using steel for nickels, as well. “If we continue minting coins with the current metal content, with each new penny and nickel we issue, we will also be contributing to our national debt by almost as much as the coin is worth,” said Rep. Luis Gutierrez, D-Ill., who chairs the House panel that oversees the U.S. Mint. Copper and nickel prices have tripled since 2003 and the price of zinc has quadrupled, said Gutierrez. A penny, which consists of 97.5 percent zinc and 2.5 percent copper, cost 1.26 cents to make as of Tuesday. And a nickel — 75 percent copper and the rest nickel — cost 7.7 cents, based on current commodity prices, according to the Mint. That’s down from the end of 2007, when even higher metal prices drove the penny’s cost to 1.67 cents, according to the Mint. The cost of making a nickel then was nearly a dime. Gutierrez estimated that striking the two coins at costs well above their face value set the Treasury and taxpayers back about $100 million last year alone. A lousy deal, lawmakers concluded as the House moved toward a vote Tuesday that directs the Treasury secretary to “prescribe” — suggest — a new, more economical composition of the nickel and the penny. Unsaid in the legislation is the Constitution’s delegation of power to Congress “to coin money [and] regulate the value thereof.” The Bush administration, like others before, chafes at that. Just a few hours before the House vote, Mint Director Edmund Moy told House Financial Services Chairman Barney Frank, D-Mass., that the Treasury Department opposes the bill as “too prescriptive” in part because it does not explicitly delegate the power to decide the new coin composition. The bill also gives the public and the metal industry too little time to weigh in on the new coin composition, he said. “We can’t wholeheartedly support that bill,” Moy said in a telephone interview. Moy said he could not say whether President Bush would veto the House version in the unlikely event that it survived the Senate. Sen. Wayne Allard, R-Colo., who is retiring at the end of the year, is expected to present the Senate with a version more acceptable to the administration in the next few weeks.
There may be some good reasons why it doesn’t make sense to change the metallic composition of the nickel and penny, but they haven’t yet been elucidated by anyone in Washington yet. The House passed a bill Thursday that would authorize the U.S. Mint to “prescribe” a new recipe for the country’s two least valuable coins — which, thanks to rising commodity prices, now cost 7.7 cents and 1.26 cents, respectively, to manufacture. This is a good idea: If steel were used instead of copper, nickel and zinc, the coins would once again cost less to make than they’re worth, and the government wouldn’t lose money on them. In fact, if the bill passed by the House became law, it would save the government an estimated $1 billion over the next decade. Is any better reason needed to pass it? Actually, the government could go one better by eliminating the penny altogether. Why bother with a coin that is essentially so worthless that it can buy nothing? The penny’s only use nowadays seems to be in paying off odd cents created by sales tax. If all transactions were rounded appropriately up or down, it would not only save the government hundreds of millions of dollars, it would remove a huge headache for consumers. Unfortunately, the Bush administration opposes this legislation on technical grounds — it doesn’t agree with Congress’ interpretation of the Constitution that it has the right to “coin money and regulate the value thereof.” OK, so let the administration take the action on its own.
Movement to get rid of the ‘nuisance’ penny makes no cents BY EDWIN D. REILLY JR. For the Sunday Gazette Edwin D. Reilly Jr., a sporadic numismatist and philatelist, lives in Niskayuna and is a regular contributor to the Sunday Opinion section.
For myriad reasons, most of which I do not agree with, there seems to be a growing movement advocating abolition of the penny. The coin is often considered a worthless nuisance, one not even worth bending over to pick up. But the need to abolish the penny is important national problem number 1,356, well behind the more urgent need to abolish the designated hitter. Think of what damage it would do to our linguistic and musical heritage if there were no longer any such thing as a penny. Thoughts would cost at least a nickel. “Nickels from Heaven” just wouldn’t cut it. (Sorry, Bing.) Penny loafers would become dime loafers because a nickel wouldn’t fit in their slots. And we’d have to buy them at J.C. Nickel. Relatively, pennies have the same value as they always did, namely, a hundredth of a dollar. But the claim that one can’t buy anything for a penny isn’t quite true; sample the used book section of Amazon.com and you’ll find hundreds of books, good copies too, on sale for one cent. (Postage extra, of course.) Yes, pennies do tend to accumulate. Like hangers in the closet, I think they propagate when left overnight on the dresser. But we must not deprive our kids of the pleasure of rolling 50 to a paper cylinder, twice, to make a dollar. I had great fun when I was 9 or 10 helping my grandfather do this at his confectionery store in Troy. He saw me counting them out and then said “Here, there’s a much faster way. You don’t have to count them.” He proceeded to weigh out 50 pennies on the store scale and then showed me that the scale was perfectly able to detect the 2 percent difference between that weight and that of a clump of 49 or 51 pennies. Thereafter, no counting, just weighing. In those days, there was the added fun of coming across an Indian head cent now and then. No more, of course; people would be foolish to part with pennies that are now worth between $100 and $400 each, depending on date and mintage. AVOIDING ACCUMULATION There are many things the individual can do to minimize accumulation of pennies. For those things paid with a check or debit card, amounts owed that are not divisible by five are no problem. Some cities even have parking meters that accept debit cards. Not Schenectady, of course, so I must carry quarters (and nickels and dimes for when I park on Liberty opposite the library), and no one has proposed abolishing those. In anticipation of small purchases, I try to remember to put three pennies in my pocket each morning. That way, I am more likely to get rid of one, two, or three when I buy something and yet don’t mind gaining one more if some purchase requires an extra four cents. Other things that would help require either governmental action or, less effectively, voluntary changes in pricing policy by businesses. Some would not oblige. But items subject to sales tax are a complication. There is no sense rounding a price to the nearest five cents if the added sales tax would throw things off, and if rounding is done after sales tax is added, there might be state or county complaints that they were being short-rounded. But there was one attempt in that direction. In 2002, Arizona Congressman Jim Kolbe sponsored the Legal Tender Modernization Act, which would have phased out the penny by specifying that cash transactions be averaged to the nearest nickel, with the rounding done such that it favors neither the customer nor the retailer. Pretty good trick, but the legislation died aborning. I have always thought it ridiculous that so many prices are set to end in 99 cents, or in the case of gasoline, nine-tenths of a cent. Do retailers think that we consumers are dumb enough to be fooled by such practices? Don’t answer. Australia and New Zealand retired their one-cent piece without any problems. But perhaps because Americans favor retention of the penny by 76 percent to 13 percent, there is no current legislation in the United States to retire ours. We have had practice discontinuing usage of coins of a certain denomination, however. Early in our history, the U.S. used a half-penny coin, but it was retired in 1857. And more recently, perhaps only 30 or so years ago, there must have been a secretly convened convention of almost all U.S. citizens, one that I wasn’t invited to, that decided we would no longer use the 50-cent piece. There is no need to punish violation; try to find one. Such coins must be stashed away somewhere with the two-dollar bills. ABOLITION SOCIETY There is a whole national society dedicated to the abolition of the penny. One of their arguments is that it costs more than a penny to mint a penny. But, as Dick Cheney is prone to say, “So?” Another is that penny handling takes a few extra seconds at the cash register. Big deal. The most complete rationale for abolishing the penny of which I am aware was made by David Owen in a very interesting and informative article in the New Yorker of March 31 (see http://www.newyorker.com/ reporting/2008/03/31/080331fa_ fact_owen). Two days earlier, a voter at Sen. Barack Obama’s town hall meeting in Greensburg, Pa., asked whether he would consider eliminating the penny. He answered “We have been trying to eliminate the penny for quite some time — it always comes rolling back. I need to find out who is lobbying to keep the penny.” I wrote and told him that I was one of them. Next year, 2009, is not only the bicentennial of Schenectady County, it will be celebrated more widely as the bicentennial of the birth of Charles Darwin and Abraham Lincoln, both born on Feb. 12, 1809. Darwin has been honored on British and Australian coins of high denomination, but we honor Lincoln more through use of his portrait on the coin we handle most. In December 2005, Sen. Richard Durbin of Illinois introduced the Abraham Lincoln Bicentennial One-Cent Coin Redesign Act (S-341), which proposed issuance of several one-cent Lincoln coins of varying design in the bicentennial year. The bi-partisan bill was co-sponsored by U.S. Senators Jim Bunning, Richard Lugar, Evan Bayh, and . . . Barack Obama! It passed both the Senate and the House, and I am delighted that Barack has stopped flirting with abolition of the penny. Moral: Save your extra pennies in that urn on your desk. A penny saved is a penny urned.
In regard to Mr. Edwin Reilly Jr.’s plea to save the penny [“Movement to get rid of the ‘nuisance’ penny makes no cents,” May 11 Sunday Gazette], I’m in perfect agreement, but would like to expand the thought a bit. We should immediately create a tenth of a penny coin (ten-pence?). This will save the public millions of dollars lost now to the oil companies by their rounding up their “99” to a full dollar. They have been getting away with price fraud for too long. And it would feel good having a pocket full of coins. It could contain a full-face portrait of Dick Cheney. AL HARRIS
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