Cost of Making the Penny Pinches Mint

(by Tom Ramstack, WashingtonTimes.com) – …The cost of minting a penny is now more expensive than the coin is worth, once again raising the possibility that it is headed toward extinction.
    Pennies cost about 1.7 cents each to produce, while nickels cost about 8.3 cents, according to the U.S. Mint.
    The problem is that the cost of metals has shot to record levels, and the price of the zinc, copper and nickel the coins contain now outstrips their face value.
    Now, the Mint is preparing a report to Congress on whether American coinage should be changed.
    “We intend to fully examine and thoroughly study it to evaluate and assess its findings and recommendations,” said Marvin Fast, spokesman for the Senate banking committee.
    The U.S. Mint also is trying to prevent speculators from melting pennies down to sell the metal for scrap.
    Last month, the government coin maker published an interim regulation to cut down on export and melting of pennies and nickels.
    “We are taking this action because the nation needs its coinage for commerce,” said U.S. Mint Director Ed Moy. “We don’t want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers.”
    There were 8.23 billion pennies minted last year, according to the U.S. Mint. The agency spent about $44 million to produce pennies last year, compared with about $30 million a year earlier.
    Travelers can take no more than $5 of pennies out of the United States, and no more than $100 of pennies can be shipped by mail. Violators could be fined up to $10,000 and imprisoned for up to five years.
    A final rule is likely later this year.
    In July, the House Financial Services domestic and international monetary policy, trade and technology subcommittee held a hearing that included discussion of whether to kill off the penny.
    Days before the hearing, Rep. Jim Kolbe, Arizona Republican, who has since retired, introduced a bill to do away with the penny. He called the coin “a nuisance.”
    Mr. Kolbe’s bill never won approval from Congress, in part because of opposition from some business groups and coin collectors.
    Americans for Common Cents, a coalition of business groups that supports keeping pennies in circulation, says charities that ask people to donate spare change would suffer if pennies are discontinued.
    An example the group mentions is the Olive Garden restaurants’ annual Pasta for Pennies campaign, in which students are asked to donate their pennies.
    Pasta for Pennies has raised more than $23 million for the Leukemia & Lymphoma Society since 1994.
    In addition, retailers would “round” their prices 5 cents higher if pennies are discontinued, costing consumers hundreds of millions of dollars, Americans for Common Cents says.
    “The vast majority of transactions would be rounded up to consumers, not down,” said Matthew Eggers, the group’s policy director.
    The American Numismatic Association, a nonprofit educational group on coins and currency, polled its 32,000 members in September to ask their opinions on whether the penny should be discontinued.
    “It was split almost exactly 50-50,” said Jay Beeton, American Numismatic Association spokesman.
    Association members who wanted to get rid of pennies said that “it’s no longer a useful component in commerce,” Mr. Beeton said. Supporters of the penny wanted to keep it for its “historic relevance.”
    The U.S. Mint struck the first one-cent coin in 1792 in Philadelphia.
    However, the agency has no influence over decisions on whether to discontinue coins or currency.
    “We do everything by congressional mandate,” U.S. Mint spokesman Michael White said. “For that to happen, Congress would have to take action.”
    A sampling of opinions at Westfield Shoppingtown in Wheaton this week showed little emotion on the issue.
    “I’m kind of neutral on it,” said Rudy Larsen, a retired NASA technical manager from Silver Spring.
    He talked about a time that he became frustrated while trying to refill a parking meter in College Park that accepted no coins smaller than dimes. He was carrying only pennies and nickels.
    Abel Minda, a Beltsville resident, said pennies inconvenienced him.
    “I’m a bartender, so I have no problem giving up pennies,” Mr. Minda said. “It takes a lot of time to count out the pennies.”

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