More Change for the Penny?
In Washington, a city known for multibillion-dollar budget deficits, some members of Congress and the Bush administration are near a meltdown over a much more modest figure: the old copper penny.
The government fears that citizens will melt old pennies to extract the copper, which, until a recent dip, has shot up in price over the past five years. In December, the U.S. Mint banned melting pennies and nickels (nickel prices are up, too), sidetracking one Ohio metals expert's plan to cash in.
The government explained that it could cost more than $1 million a day to replace coins withdrawn from circulation to extract the metal. The increase in metal prices means it costs more to make the coins than they are worth. Walter Luhrman, of Jackson, Ohio, figured he'd net $1.5 million a year.
Luhrman, 60, president of Jackson Metals, said in an interview that he has spent his entire career in metals. Although pennies have been made of a 95 percent zinc-5 percent copper mixture since 1982, he calculates that there are 191 billion pennies in circulation -- including those in your dresser drawer -- and about one in four was minted before 1982 -- thus made of 95 percent copper (and 5 percent zinc).
"This is real money," Beth Deisher, editor of Coin World, the world's largest-circulation coin publication, said of the businessman's idea. "It's like going for gold on the ocean floor."
Deisher, who editorialized against Luhrman, said that for the past few years, "Rome has been burning, and the Treasury hasn't done anything about it."
Indeed, over the past few months, the issue has been no small change in Washington, triggering two bills, a scheduled hearing and complaints to the Treasury Department about why it has taken so long to react to rising metal prices.
It costs 1.67 cents to make a penny, up from .93 cents in 2004. This means the U.S. Mint lost $31 million in making 6.6 billion new pennies in fiscal 2007 and another $68 million for more than 1 billion nickels, according to Michael White, a spokesman for the mint. Speculators, taxpayers, suppliers and coin collectors are affected, too.
The government is "grossly overestimating the effect this would have on coinage supplies across the country," said Matt Thornton, a spokesman for Rep. Zack Space, a freshman Democrat who represents Luhrman's district. "They are assuming everyone will take coins out of circulation and melt them down."
Space has introduced a bill that would ban the mint's ban on Luhrman's pennies-from-heaven plan.
The Treasury has proposed that it be allowed to transfer from the Congress to itself the authority to measure and make changes in the composition and weight of coins, so it can head off future spikes in metal prices.
This would be a historic change. Since Congress created the mint in 1792, it has exercised constitutional authority over America's pocket change. Space's bill to help Luhrman is attached to the Treasury proposal, which is up for consideration in the House Financial Services Committee.