The debate to change the metal composition of U.S. coinage was waged on the House floor Tuesday.
With the surging prices of metals like zinc and copper, it now costs more than a penny to make a penny and about 7.7 cents to make a nickel.
A new House bill entitled "H.R. 5512, the Coin Modernization and Taxpayer Savings Act of 2008" would seek to change that and it was that bill, which was in debate.
The proposed legislation would give the Treasury Secretary the power to change the composition of coins and use less expensive metals. It also would require the United States Mint to produce steel pennies within six months of the bill’s enactment.
What’s at stake with no change? According to Rep Luis V. Gutierres, the subcommittee Chairman who held a hearing over the bill on March 11, a continued loss of $100 million dollars annually. Gutierres stated,
“If we continue minting coins with the current metal content, with each new penny and nickel we issue, we will also be contributing to our national debt by almost as much as the coin is worth.
These losses are mounting rapidly, and with commodity prices forecasted to stay near existing levels for several years, we need to act immediately to give the Mint the flexibility to lower the costs of producing the penny and the nickel."
Some lawmakers believe the bill is unconstitutional, as it would give authority to the Treasury that belongs in the hands of Congress.
Rep. Ron Paul commented that there was no "…reason to further delegate our power (to the Treasury Department), and essentially abdicate Congressional oversight as the passing of HR 5512 would do."
The U.S. Mint, and Directory Moy specifically, would like to see changes in the bill before passage. The six month provision to change the penny, as an example, is time restrictive according to Moy. A 18-24 month timeline was suggested.
In addition, the rules in the bill prevent the Mint from changing a coin’s metallic content until after its costs exceeds its face value. It would be more beneficial to change a coins composition prior to it losing money or, take measures to reduce a coin’s cost simply to save money even though it’s still profitable.
According the Director Moy’s testimony before Rep. Gutierrez’s committee, only the penny and nickel have negative seignorage. The dime costs a little over 4 cents, the quarter nearly 10 cents and a dollar coin roughly 16 cents to make.
A House vote on the bill is expected this week.