House Reps approved a res stop making pennies that cost more than they're worth could save about $100 million a year
USATODAY THE U.S. House of Representatives approved a resolution to stop making pennies that cost more than they're worth -- a move that "could save about $100 million a year, or roughly three dimes for every American." (See the complete story at
http://redwoodage.com/content/view/136373/45.)
The U.S. minted 7.4 billion pennies in 2007, at a cost of 1.26 cents per penny. Nickels cost about 7.5 cents. We know that the cost of zinc and copper has risen sharply in recent years -- consistent with metal prices in other times of war.
A year and a half ago the U.S. Mint even took the step to declare it illegal for consumers to recycle pennies as scrap metal. It seemed a random law, until you looked at the fact that with copper's skyrocketing prices a penny's worth of metal was worth more than the penny itself. (Note that copper pennies made prior to 1982 are all copper, versus the zinc blend produced after 1982. The zinc extraction process for the newer pennies makes recycling cost-prohibitive anyhow.) According to one source, historically coins that are worth more in their base metals than their face values quickly disappear out of circulation despite the law.
One solution proposed by Congress earlier this week is steel pennies and nickels. (Pennies made during World War II were composed of steel.) Other solutions bantered about include:
• Have the U.S. Mint make new types of pennies and nickels out of metals worth less than their face values.
• Re-value the penny to be worth a nickel, and re-value the nickel to be a worth dime.
• Phase out the creation of new pennies and nickels.
But there's another reason for the penny's increased cost that's lurking in the background. Indeed, it's the good old paper dollar (an instrument hit with rising pulp-paper costs).
The dollar has fallen so far against foreign currencies. A euro cost just 87 American pennies shortly after it was introduced in 1999. But two weeks ago, it hit $1.60. If those rates hadn't changed, a penny might only cost 0.6 cents today.
If the Bush administration wants to preserve the penny, it ought to start supporting the dollar. Otherwise, that may be the next piece of currency we eliminate.