Legislation to change the metallic composition of the penny and nickel to a less expensive copper-colored steel passed in the U.S. House of Representatives on May 8, 2008.
However, the plunge in base metal prices since could very well end the legislation’s chances of moving forward in the Senate.
The goal of the bill, which it titled Coin Modernization and Taxpayer Savings Act of 2008 – H.R. 5512, was directed toward saving money after high copper prices pushed production costs of the penny up to about 1.26 cents and the nickel to about 7.7 cents.
Since May, copper prices have fallen to where the melt value of a penny is now under a half cent and the nickel is just slightly higher than 5 cents — the U.S. Mint now makes money issuing pennies and almost breaks even with nickels.
Prior, high copper costs resulted in an estimated $100 million annual production loss for the two coins. Rep Luis V. Gutierres, the subcommittee Chairman who held a hearing over the bill back in March of 2008, commented then,
“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.”
Commodity prices have instead fallen. Minting the penny and nickel was a huge money losing prospect for nearly two years. That’s no longer the case, at least for now.
With the prospect of little or no present day monetary savings in the bill’s passage, the restrictive, micro-managed version of H.R. 5512 that passed in the House, and congressional resistance in enabling the U.S. Mint to proactively modify the composition of pocket change, it would now seem less likely the bill will pass the Senate.
Unfortunately, this cycle is likely to repeat itself again.
The best measure would be amended or new legislation where the Mint has the flexibility to modify coin compositions much like the Royal Canadian Mint can.
If coins can be produced from different alloys to look the same, retain their quality, and work in vending machines — and they can — why not write legislation with guidelines the Mint can use to manufacture circulating coins with quality AND profits in mind?
If metal "X" is cheaper, use it in coins. If metal "X" skyrockets in price and "Y" becomes less costly, why not switch?
Congress is in the middle of a five-week vacation and will not return to work until September.