New penny coming?

Not that it was ever really worth much, but the penny is worth less than it used to be, at least compared to the cost of minting it. The nickel, too.

These days, your thoughts are worth 1.7 cents.

That’s what it costs the government to forge a penny, thanks to the rising price of metal. A nickel costs 10 cents. Congress, in its infinite wisdom, has concluded that’s a pretty bad deal.

A House subcommittee led by Rep. Luis Gutierrez (D-Ill.) convened a hearing Tuesday on a proposal to change the composition of both coins. Republicans and Democrats like the concept, particularly its promise to save taxpayers $100 million a year by using cheaper metals at the U.S. Mint. If the legislation clears the House and Senate and President Bush signs it, you could be plucking steel pennies off the street before year’s end.

[…]

Until recently, Mint officials say, no American coin had ever cost more to produce than it was worth.

Global metal prices began rising in 2003, driven by increased demand for raw materials, particularly in India and China, according to Mint statistics. The price of copper quadrupled in the past five years. Nickel more than tripled, and zinc nearly did the same. The Mint lost $33 million on penny and nickel production in the 2006 fiscal year. In 2007, it lost $99 million.

“There is no indication,” Mint Director Edmund Moy told the House Subcommittee on Domestic and International Monetary Policy, Trade and Technology in written testimony, “that copper, nickel and zinc prices will decrease over the short term.”

Enter the Coin Modernization and Taxpayer Savings Act of 2008, the subject of Tuesday’s hearing. It would give the Treasury authority to set the weight and composition of any coin whose production costs exceed its face value for five consecutive years. It also requires the Mint to start producing a primarily steel penny within 180 days of the bill becoming law, so taxpayers would save money almost right away.

The bill requires any new coin to work in existing vending machines. That’s a concession to the National Automatic Merchandising Association, which opposed an earlier version for fear that it could force hundreds of dollars in upgrades to each of the nation’s more than 6 million dispensers of soda, snacks and other items. An association lobbyist testified in favor of the revised bill on Tuesday.

Other concerns persist. Moy told the subcommittee that six months isn’t nearly enough time to produce a steel penny and that the five-years-of-losses requirement would prevent the Treasury from stepping in early if the dime or quarter — which currently run 7 and 10 cents to produce, respectively — suddenly grow more expensive.

Several Republicans worried about Congress giving up coinage control to the executive branch. “It seems to me that the Mint has been the leader in slowing down changes to coin composition,” said Rep. Peter Roskam (R-Ill.), who introduced a bill last year that would have mandated a cheaper penny.

Paul called the current proposal an unconstitutional delegation of power and a symbol of “how far we have fallen” in monetary policy. America, he said, has failed to maintain a gold standard or silver standard for its currency. “Now,” he said, “we cannot even maintain a zinc standard.”

I realize Paul has this weird fetish with shiny metals, but are we really triggering a Constitutional crisis by changing the ingredients in our coins? I guess maybe if you believe that we can’t have a real economy unless every dollar bill has a piece of gold sitting in Fort Knox with its serial number carved into it. Whatever.

Anyway. I don’t have a particular problem with this. I had a couple of 1943 steel pennies when I was a kid, and I think it’ll be a bit weird to see them return on a wide scale – maybe they can at least put enough copper to make them appear to be the same color. Being able to stick them to magnets again, though, that’ll be cool.

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