Penny pinching: Can Obama kill the one-cent coin?

[jimmy olsen]

I hope so, but I doubt it.

http://firstread.nbcnews.com/_news/2013/02/19/17019470-penny-pinching-can-obama-manage-elimination-of-one-cent-coin?lite

Penny pinching: Can Obama manage elimination of one-cent coin?
By Ali Weinberg, NBC News

President Barack Obama finally broke his silence on an issue of national importance Friday – he thinks it's time to retire the penny.

The possible extinction of the one-cent coin was a featured economic question in a Google+ Hangout with the Commander in Chief last week as John Green, the co-creator of a popular YouTube channel, applied a little presidential peer pressure.

"Australia, Canada, New Zealand, many other countries have gotten rid of their pennies," Green said. "Why haven't we done it?"

"I gotta tell you, John, I don't know," Obama responded, adding, "Anytime we're spending money on something people don't actually use, that's an example of things we should probably change."

But why should anyone care? They're pennies. Aren't there more valuable things to worry about?

First, pennies actually cost more to make than they're worth. In 2012, every penny cost 2.41 cents to make – more than twice their face value.

And as zinc and copper – materials used in minting the penny – have become costlier due, in part, to manufacturing shifts in China, which are likely to raise costs further.

Granted, the total cost of minting pennies was only $58 million last year – less than one-tenth of a percent of total federal spending in 2012 – but groups like Citizens to Retire the U.S. Penny have long been making the economic case for getting rid of the penny (plus, the group adds, fishing for pennies adds about 2 seconds to each cash transaction per day).

And the U.S. military has already decided they're essentially useless; all Army and Air Force Exchange Service stores on bases round all cash purchases up or down to the nearest nickel.

With both parties looking for ways to cut government spending, it seems as though cutting penny production could be a relatively painless, if insignificant, place to start. But in the Google+ Hangout, Obama ceded that Washington has bigger fiscal fish to fry.

"The penny is an example of something that I need legislation for," he said. "And, frankly, given all of the big issues that we have to deal with day-in/day-out, a lot of times it just doesn't -- you know, we're not able to get to it."

There have actually been efforts to pass penny-banning legislation. Back in 2001, then-Rep. Jim Kolbe (R-AZ) introduced the "Legal Tender Modernization Act," which would have made pennies obsolete by requiring retailers to round up or down to the nearest nickel on cash purchases.

That bill failed, and Kolbe's second attempt in 2006, the "Currency Overhaul for an Industrious Nation (COIN) Act," after zinc costs nearly doubled, met a similar fate.

But the president doesn't need Congress to explore other, cheaper alternatives to zinc – the main metal in pennies. In fact, the administration's 2013 budget encourages the Treasury to "explore, analyze, and approve new, less-expensive metals for all circulating coins like aluminum, iron and lead."
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It wouldn't be the first time Abe Lincoln's coin got a makeover. Back in 1982, the penny changed from 95 percent copper and 5 percent zinc to 97.5 percent zinc and 2.5 percent copper.

(And lest so-called "penny hoarders" try to melt that valuable pre-1982 copper down, the Mint in 2006 prohibited the melting of pennies and nickels. It also made it a crime to carry more than $5 in one and five-cent coins out of the country).

Changes to the composition of pennies do have Congressional champions: Ohio Rep. Steve Stivers (R) introduced the "Cents and Sensibility Act" in December 2011, which would mandate that pennies were out of American steel (much of which comes from the Buckeye State) and dipped in copper.

But these efforts will be met with some serious resistance from the zinc lobby (yes, there is one). The company Jarden Zinc, which creates "metal and zinc coinage," according to its website, paid lobbyist Mark Weller $340,000 in 2012 to discuss issues related to "minting/money/gold standard" with members of Congress and the Mint, according to the Center for Responsive Politics.

Weller also represents the pro-penny group Americans for Common Cents, whose website warns of the risk of inflation that eliminating the penny would bring, and whose headquarters are on K Street, known for its many D.C. lobbyist offices.

"Americans for Common Cents aims to inform and educate policymakers, consumers, and the media about the penny's economic, cultural, and historical significance," the group's website reads.

The political power of the penny is likely another reason Obama hasn't acted on getting rid of it. As far back as 2008, when he was still a candidate, the "penny lobby" appeared to mystify Obama.

Asked about it at a town hall in Pennsylvania, he said, "We have been trying to eliminate the penny for quite some time -- it always comes back," joking, "I need to find out who is lobbying to keep the penny."

This story was originally published on Tue Feb 19, 2013 2:51 PM EST

[Eddie Teach]

It also made it a crime to carry more than $5 in one and five-cent coins out of the country).

[CountDeMoney]

I hope so, but I doubt it.

I hope you're beaten with a pillow case of them.

[Razgovory]

I can do pillow case full of door knobs, pennies may not work so well.

[Josquius]

Makes sense.

Its strange but I can't recall ever hearing of the penny being an issue in the UK but I have seen it from time to time about America. Its almost as stupid for Britain as for the US.

[The Brain]

Sweden got rid of the closest equivalent 20 years ago.

[Neil]

Sweden got rid of the closest equivalent 20 years ago.

Different situation though.  Swedish currency was never valuable in small amounts.

[Berkut]

I think there is a set of reforms that individually are probably not that big of a deal, but taken together it seems crazy that we have not done them yet.

Ditch the penny.
Ditch the dollar bill, replace with dollar coin. We keep trying new dollar coins, but they won't even catch on until you get rid of the dollar bill.
Switch to fucking metric already. Seriously. We are STILL using antiquated English measurements? I wonder how much that costs every year in lost efficiency.


Others?

[garbon]

So I saw this on the Canadian case on wiki:

A 2007 survey indicated that only 37 percent of Canadians used pennies, but the government continued to produce about 816 million pennies per year, equal to 25 pennies per Canadian.

What does use mean here? Inevitably if I pay for something in cash, I'm going to get some pennies and every so often if I haven't cleared out my bag, might use one.

[garbon]

Ditch the dollar bill, replace with dollar coin. We keep trying new dollar coins, but they won't even catch on until you get rid of the dollar bill.

While I can understand that for government costs - why would individuals want to support that? More annoying to carry dollar coins than bills.

Switch to fucking metric already. Seriously. We are STILL using antiquated English measurements? I wonder how much that costs every year in lost efficiency.

Same as the above. Might help someone save costs but why would individuals trained on English measurements want to learn the metric system as a daily replacement?

[alfred russel]

I think there is a set of reforms that individually are probably not that big of a deal, but taken together it seems crazy that we have not done them yet.

Ditch the penny.
Ditch the dollar bill, replace with dollar coin. We keep trying new dollar coins, but they won't even catch on until you get rid of the dollar bill.
Switch to fucking metric already. Seriously. We are STILL using antiquated English measurements? I wonder how much that costs every year in lost efficiency.


Others?

I'm with you on the penny, but not the rest. I don't carry coins; and I don't have a wallet to accomodate them. Bills are much easier. I'm willing to pay in taxes the extra $2.00 or whatever my share is to keep the dollar bill.

Also, english measurements aren't antiquated if we still use them. In some cases they even have advantages over metric. The cost of rocking the boat is probably more than any efficiencies that would be gained.

[The Brain]

Sweden got rid of the closest equivalent 20 years ago.

Different situation though.  Swedish currency was never valuable in small amounts.

What do you mean? The 10 öre coin was worth more than the penny.

[grumbler]

Makes sense.

Its strange but I can't recall ever hearing of the penny being an issue in the UK but I have seen it from time to time about America. Its almost as stupid for Britain as for the US.

Its strange that you wouldn't know about the controversy over the tiddler (the half-penny, which was the equivalent of the US penny), you being British and all, but, then, again, the tiddler was before your time and what Brit knows any of Britain's actual history?

Ironically, the argument over the tiddler was the exact opposite of the argument over the US penny; the public disliked the tiddler and the government liked it.

Part of the reason why the public hated the tiddler was its size, though.  Since British coins (within metal class) were proportional in weight to their value (a normally good idea) the tiddler had to be made half the weight of a penny and a quarter the weight of the tuppence.  If the tuppence was to be kept a reasonable weight, the tiddler had to be too small and easy to lose.  They were only in circulation for a dozen years or so.

[DGuller]

Switch to fucking metric already. Seriously. We are STILL using antiquated English measurements? I wonder how much that costs every year in lost efficiency.

It costs us 10% in production efficiency and 10% in trade efficiency.

[Valmy]

While I can understand that for government costs - why would individuals want to support that? More annoying to carry dollar coins than bills.

There are people who have more than a small amount of 1s at any one time?  Highly doubtful.  If people were still using cash in those small denominations to a large degree I could see your point here but should we really be spending millions because it is marginally more convenient to have 2 pieces of paper instead of 2 pieces of metal?