Obama's plan to downgrade nickel faces protest from laundromat owners. Should U.S. Mint drop the penny?
For four years, given the rising price of metals, it has cost the U.S. Mint more to produce and distribute the penny and the nickel than they are worth. As the Wall Street Journal noted, "like many things produced in Washington, U.S. coins aren't what they seem." A penny, which in 2009 cost 1.62 cents to make, is mostly zinc. The nickel, which cost 5.79 cents, has more copper than nickel. Silver? No U.S. coin has any.
So President Obama is proposing to save money by making the coins from cheaper material than their namesakes. Mindful of the likely uproar from the zinc industry, laundromat owners and coin collectors, the government is not disclosing its option. Speculation centers on aluminum alloy, which other countries use, or perhaps industrial porcelain, embedded with an ID chip.
Vending machine owners and laundromat businesses are poised for a fight -- worried that any change in size, weight and metal content would require costly retooling or even replacement of their machines.
"We're all taxpayers, and we're all in favor of being able to mint coins at a more reasonable cost," said Brian Wallace, president of the Coin Laundry Assn. "But we want to make sure there aren't unintended consequences that could deeply impact the small business owner during a recession."
For their part, coin collectors seem more tepid in their response. "I am not necessarily opposed as long the new coins are not awful," said one writer on the Coin Community Info Blog. "I am glad to see there is no plan to get rid of the penny."
And the penny, as they say, is where the rub is. Periodically a member of Congress, usually Ohio Democrat Zack Space, introduces a bill to change U.S. coin content or even banish the penny, on grounds that it is a costly expense for business owners.
But advocacy groups like Americans for Common Cents, backed by the zinc industry, usually manage to defeat the idea. "The penny is a hedge to inflation," argues Mark Weller, the group's executive director. Without it, he adds, businesses would merely round up to a nickel.
In its 2010 budget asking Treasury to research alternative coin content, the Obama administration made no mention of the 1-cent coin, which now costs 2 cents to make. As the president keeps saying, with a full plate, you have to pick your political battles carefully.
-- Johanna Neuman
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