We’re Spending Too Much to Make a Little Money

http://www.nytimes.com/2008/02/15/nyregion/15nyc.html

February 15, 2008
NYC
We’re Spending Too Much to Make a Little Money
By CLYDE HABERMAN

Not a chance, my neighborhood news dealer said. He’s a friendly fellow. But no way was he about to count the 75 pennies put forth as payment for two newspapers. The woman at the bakery was absolute about not accepting 215 pennies for a danish.

Who could blame them?

My penny antic was not meant seriously. It was intended to test reactions to a licit, if unusual, proffer of United States currency. It confirmed what most people would have already guessed: No coin is as unloved in this city as the humble penny, even when it comes in multiples more reasonable than 75 or 215.

There are exceptions. Those curbside guys with supersize jars say they are open to contributions of as little as one cent to help the homeless. An organization on the Upper West Side called Common Cents gathers pennies collected by schoolchildren and turns them into grants to neighborhood groups.

But generally speaking, New Yorkers have little use for the one-cent coin.

Many reject it as change, tossing it instead into the tip baskets that sit on many store counters. Few stoop to pick up a penny on the sidewalk. In the not-so-distant days of the subway token, signs instructed riders to “avoid using pennies” as payment. Some in New York, a city not blessed with vast reservoirs of patience, find it a torment to be stuck on a checkout line while a customer up ahead fumbles for a penny or two.

No matter whom they support in the presidential election, those people take to heart Senator Barack Obama’s campaign slogan: “Change we can believe in.”

One bit of change that many New Yorkers definitely do not believe in is the penny.

They would just as soon see it disappear, with business transactions rounded to the nearest nickel. A few European countries have blazed the trail, abolishing their smallest coins as a waste.

Nothing like that is about to happen in this country, certainly not as we enter the 100th year of the one-cent piece bearing Abraham Lincoln’s profile. That year began at midnight on Tuesday, Lincoln’s Birthday. Next Feb. 12 is the 200th anniversary of his birth. It will also be the 100th anniversary of the Lincoln penny, first issued in 1909. For that event, the United States Mint plans to issue four new designs for the penny’s reverse side, each representing a different phase of Lincoln’s life.

So the penny will stick around. The real question is how to make it affordable. Sharply rising world prices in recent years for its components, zinc and copper, have made it a money loser. The same holds for the five-cent coin, made of copper and nickel.

In the last federal fiscal year, it cost the Mint 1.67 cents to make each of the roughly eight billion pennies it churned out. In other words, taxpayers paid more than $130 million for coins valued at only $80 million. Looked at another way, even your opinions have become more expensive. It costs about 3 cents to put in your 2 cents.

The finances of the nickel are even grimmer. Each 5-cent piece cost 9.5 cents to make last year. So more than $120 million was spent to produce about $65 million worth of that coin. Rarely has a line from a long-ago American writer, Franklin Pierce Adams, rung truer: “What this country needs is a good five-cent nickel.”

These losses cannot be sustained, says Edmund C. Moy, the Mint’s director. “You can’t lose money on two of our big products and hope to have a long-term viable organization,” he said.

Mr. Moy wants Congress to give his agency more flexibility to “determine the metal content of the coins at any given time,” depending on shifting world prices, which have declined somewhat of late. One idea being considered is a copper-coated penny with a core of steel instead of zinc, as is now the case.

That sort of change makes sense to Representative Michael N. Castle, a Delaware Republican with a longstanding interest in this issue. “Obviously, we need to get the costs in line,” Mr. Castle said. “The other alternative is to get rid of it altogether,” he said, referring to the penny, but the reality is that “there’s still a great deal of political opposition” to going that route.

Too bad, says Beth Deisher, the editor of Coin World, a magazine for collectors that believes the penny’s demise is overdue. With the 100th anniversary in sight, Ms. Deisher said, “we think it would be a good idea to bring the Lincoln cent to a close.”

“Name the things you can buy for a penny,” she said.

Except for thoughts, not a single thing. If you’re the government, you can’t even buy a penny for a penny.

E-mail: haberman@nytimes.com