WASHINGTON – The rising cost of metals isn't just hurting jewelry makers and aluminum consumers. The price of copper and nickel, the very materials used to make U.S. currency, is on the minds of House lawmakers trying to find a way to cut production expenses.
The U.S. Mint is a money-making government operation in more ways than one. In 2005, it made $730 million in profit. But pennies are being targeted as the big loser for the mint. It costs the government 1.4 cents for every penny produced. Multiply that by 7 or 8 billion pennies made each year and it comes to a $20 million loss.
One bill pending on Capitol Hill would do away with the penny, requiring industry to round the cost of every item to the nearest nickel. But that plan may not be a winner either, say some on Capitol Hill.
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"Nickel prices are just spiking significantly and that is why you're now seeing the nickel as costing more to produce than face value as well," David A. Lebryk, acting director of the U.S. Mint, told the House Financial Services Subcommittee on Domestic and International Monetary Policy, Trade and Technology on Wednesday.
"I cannot support eliminating the penny at this time," said Rep. Carolyn Maloney, D-N.Y. "Although the penny does cost more than what it cost to make the penny, the nickel also cost more than the nickel to make. According to the Mint, the penny cost 1.4 cents and the nickel 6.4 cents. ... If we drop the penny we would need to make more nickels so it's not clear the net would come out ahead financially."
A growing number of individuals say the penny is a pain and not worth keeping. Still, 55 percent of those surveyed by USA Today recently said they find the penny useful.
Maloney added that eliminating the penny would hurt the poor.
"A study by a former Federal Reserve economist shows that rounding hurts lower income most and this effect would be especially strong if only cash transactions are rounded," she said.
But if the penny were eliminated, many of the phrases in common use in the United States would go out the window. People would no longer be able to give out their two cents worth, nickels would have to be offered for someone's thoughts and it's uncertain whether a penny saved could any longer be counted as earnings.
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