The penny’s value isn’t quite what it used to be, which was never that much in the first place. It now costs more than a penny to manufacture one, with the coin’s component metals – primarily zinc, with a little copper – becoming ever more expensive.
So with Congress this summer searching for every legitimate method of slashing the national budget and paying down trillions of dollars in debt, a small lobby of academics and politicos say there’s no better time than now to finally sacrifice the humble, but costly cent.
“The penny has no functional use and is costing the country tens of millions a year to make,” said former Rep. Jim Kolbe (R-Ariz.), who as a congressman last decade sponsored unsuccessful legislation advocating the coin’s demise. “Doing away with it doesn’t raise taxes, and it doesn’t eliminate services. That’s a good deal.”
Robert Whaples, chairman of Wake Forest University’s economics department, said, “The time is as ripe now as ever to once and for all get rid of the penny. Congress has to cut, and this is about as painless a cost-saver as there is.”
The cost of making a penny has exceeded its face value for five consecutive fiscal years, reaching 1.79 cents in 2010, according to the U.S. Mint’s most recent annual report, which also noted that the penny and nickel were produced at a loss of $42.6 million — almost double the $22.0 million loss from fiscal year 2009. Mint records indicate the government has produced nearly 2.9 billion circulating pennies this year, through July.
Congress in 2010 ordered the Mint to research using alternative – read: less expensive – metals in coin production. The Mint next year must report to Congress its metal composition suggestions for coins, including the penny, spokesman Michael White said.
Could such metal meddling foreshadow even more change change?
Absolutely, says Jeff Gore, a physics professor at the Massachusetts Institute of Technology who, on the side, runs the special interest group Citizens for Retiring the Penny.
“The rising metal costs and the bad economy certainly provide a new opportunity for Congress to take a look at this issue,” said Gore, who intends to redouble his anti-penny efforts. “I don’t see immediate changes. But when we’re spending money to make money, to me, it’s a total no-brainer for them to move in the no-penny direction.”
But what about the millions of financially struggling Americans who’d rather not round their purchase costs to the nearest nickel?
“With the economy as bad as it is, doing away with the penny is one of the worst things you could do to consumers,” said Mark Weller, executive director of Americans for Common Cents, a pro-penny advocacy group. “There are certainly trends that have moved us away from cash and coin, but many people, particularly the poor, use cash as their primary means of payment, and such a change would disproportionately affect them.”
The zinc industry, which primarily funds Americans for Common Cents and employs Weller as a lobbyist, has been particularly willing to put cash behind its penny preservation push.
Since 2006, Jarden Zinc Products of Greeneville, Tenn., has spent nearly $1 million lobbying the federal government, including $60,000 during the first half of this year. Federal lobbying disclosure documents indicate Jarden Zinc has regularly lobbied Congress and the U.S. Mint on issues including “issues related to the one-cent coin” and “penny re-design.”
Metal makers aren’t the only people whose steely resolve aims to ensure the penny’s continued circulation.
Take the Leukemia & Lymphoma Society, which last year counted 10 million students who participated in its Pennies for Patients program. Together, they raised more than $20 million to battle the diseases.
“To the Leukemia & Lymphoma Society, pennies matter,” society spokeswoman Kristin Hoose said. “These programs help students learn the value of achieving goals that benefit others and let them experience empathy and compassion.”
Weller and Hoose may be heartened to learn that one key member of Congress – Rep. Ron Paul (R-Texas) – also has little appetite for a penny cull.
As chairman of the House’s Domestic Monetary Policy and Technology Subcommittee, Paul doesn’t have strong opinions on the penny issue, and he’s not likely to conduct a hearing on it, spokeswoman Rachel Mills said.
And so far this congressional session, no member of either the House or the Senate has introduced penny-killing legislation similar to that of Kolbe. Proposed congressional changes to U.S. money have primarily focused on the little-used dollar coin, which has prompted several bills that, in various ways, seek to limit or eliminate its minting.
That hardly means, however, that the penny will assuredly escape the metal recycling heap.
First, there’s international precedent. Australia and New Zealand put pennies out to pasture a generation ago. This year, Canada’s Senate Committee on National Finance recommended death for their home and native land’s smallest monetary piece, in part citing cost savings.
In 2008, President Barack Obama tacitly endorsed its elimination, saying, “I will seriously consider eliminating the penny as long as we find another place for Lincoln to land.”
In the end, however, it may be hearts, not brains, that are the greatest obstacle to a penniless nation, acknowledges Whaples, Wake Forest University’s economics department chairman. After all, quarter saved equating a quarter earned, or offering a dime for one’s thoughts, doesn’t quite sound right. And will the United States really abolish billions of bits of Americana that feature Abraham Lincoln’s likeness?
“Everyone grew up with pennies. Emotional attachment is powerful force,” he said. “And that right there may be what’s keeping lawmakers from doing a sensible thing.”
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