Wednesday, May 7, 2008

AP: Steel pennies make cents to lawmaker

The following Associated Press story appeared on page 3A of the Wednesday May 7, 2008 issue of the St. Paul Pioneer Press.

WASHINGTON - Further evidence that times are tough: It now costs more than a penny to make a penny. And the cost of a nickel is more than 7-1/2 cents.

Surging prices for copper, zinc and nickel have some in Congress trying to bring back the steel-made pennies of World War II, and maybe using steel for nickels, as well.

"With each penny and nickel we issue, we will be contributing to our national debt by almost as much as the coin is worth," said Rep. Luis Gutierrez, D-Ill., who chairs the House panel that oversees the U.S. Mint.

Copper and Nickel prices have tripled since 2003 and the price of zinc has quadrupled.

A penny, which consists of 97.5 percent zinc and 2.5 percent copper, cost 1.26 cents to make as of Tuesday. And a nickel - 75 percent copper and the rest nickel - costs 7.7 cents, based on current commodity prices, according to the Mint.

That's down from the end of the 2007, when even higher metal prices drove the penny's cost to 1.67 cents. The cost of making a nickel then was nearly a dime.

Gutierrez estimated sriking the two coins at costs well above their face value set the Treasury and taxpayers back about $100 million last year alone. A lousy deal, lawmakers have concluded. On Tuesday, the House debated a bill that directs the Treasury secretary to "prescribe" - suggest - a new, more economical composition of the nickel and the penny. A vote is expected later in the week.

Unsaid in the legislation is the Constitution's delegation of power to Congress "to coin money (and) regulate the vlaue thereof."

The Bush administration, like others before, chafes at that.

Mint Director Edmund Moy told House Financial Services Chairman Barney Frank, D-Mass., that the Treasury Department opposes the bill as "too prescriptive" in part because it does not explicitly delegate the power to decide the new coin composition.

Sen. Wayne Allard, R-Colo., is expected to present the Senate with a version more acceptable to the administration in the next few weeks.

Other coins still cost less than their face value. The dime costs a little over 4 cents to make. The quarter costs almost 10 cents. The dollar coin, meanwhile, costs about 16 cents to make, the Mint said. - Associated Press

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