Pinching Pennies in America
U.S. Mint doesn’t know the value of a dollar

When I was a kid of about eight or nine, I collected pennies. I had a special blue cardboard collecting folder that had little circles for pennies minted in the years 1900 through 1970. There were also some blank circles for any 19th century pennies I might find and for those produced in the post-1970 future.

The amazing thing is that I quickly found pennies for most of the years, even some pre-1909 Indian-head pennies. The tricky ones to find were the obscure editions like the 1943 penny that was made out of steel so our country’s copper supply could be directed toward the war effort. Many of the steel pennies were melted down after the war, so finding one in my fistful of change at the school cafeteria was cause for celebration.

A recent study determined that it costs the U.S. Mint 1.67 cents to produce a penny. In honor of the bicentennial of Lincoln’s birth, the Mint will produce four different versions of the one-cent coin in 2009. Image courtesy of the U.S. Mint.

I still have a fondness for coin collecting and my wife and I have a new blue folder for displaying each of the 50 state quarters. We just found Idaho and are on the lookout for Utah!

Speaking of specialty coins, the United States Mint recently revealed plans to celebrate the bicentennial of the birth of Abraham Lincoln with a complete overhaul of the penny. Starting in 2009, Honest Abe’s bushy profile will continue to grace the obverse side of the coin while the reverse side will feature four different scenes from important events in Lincoln’s life. Those scenes have yet to be chosen but I imagine we’ll have one from his rail-splittin’ youth, one from his campaign for the presidency, and one from the Civil War. The fourth one could be a macabre scene of John Wilkes Booth aiming a single-shot pistol at Lincoln’s head at the Ford Theatre, but I’m hoping the Mint will bypass that moment in favor of a more cheerful moment in our 16th president’s life.

To be honest with you, I’m surprised the Mint has plans to crank out any pennies at all in 2009. I think everyone might be better served if the Mint just issued a memo urging everyone to cash in all of the pennies they have squirreled away in drawers, bowls and Mason jars. That should take care of any penny shortage we might currently have. And don’t forget to look between your sofa cushions and under the floor mats of your car.

The reason I think we should stop minting pennies—aside from the fact that it is probably unnecessary—is that is wasteful. It currently costs the government 1.67 cents to manufacture one red penny. That might not seem like a lot until you do some math (something the Government Accounting Office in Washington’s seems uncharacteristically loathe to do).

It costs the mint $5,000 to make $3,000 worth of pennies. Can you think of any other business that would take a $2,000 loss on every $5,000 investment? You probably can’t because that business would not be in business for very long.

You could say that the U.S. Mint doesn’t know the value of the money it’s producing.

The disparity between the monetary worth of the penny and its worth in metal has grown so great that the Mint had to enact new regulations this year limiting the exportation and melting of certain U.S. coins. Not surprisingly, the new rule affects both the penny and the nickel.

“The new rule safeguards the integrity of U.S. coinage and protects the taxpayers from bearing the costs to replace coins withdrawn from circulation,” said U.S. Mint director Edmund C. Moy in April. He cited the rising commodity prices of copper, nickel and zinc as being the primary reason why metal speculators were hoarding the coins with plans to sell them as scrap metal for profit.

The fact that our government now spends more money making coins than those coins are actually worth in monetary terms is one more example of how taxpayers are being hosed. I compare taxpayers to parents doling out allowance to teenagers who have never worked a day in their lives. It’s understandable that as they saunter through the mall of life those teenagers might be oblivious to the hard work it took to earn that money. It is up to the parents to remind them by withholding funds when they act irresponsibly, making them work for the allowance, and urging to spend their money wisely.

One of the problems is that the government agencies that take our money do so in multiple ways, many of them subtle, so as to not to incur the wrath of the public and start a taxpayer revolution. Before you receive your paycheck, federal and local tax collection agencies remove a hefty chunk of it. Then every time you spend what is left, you are paying sales taxes. And the prices of those items have been adjusted for the sales taxes previously paid by the retailer.

The group Americans for Tax Reform estimated this year that Taxpayer’s Independence Day occurred on July 6th. That’s the “date in the calendar year when the average American worker has earned enough to pay off his or her share of the burdens of government at the local, state and federal levels.”

For those buying gasoline in North Carolina, that date was probably somewhat later in the calendar. That’s because we have to pay over 30 cents per gallon in state taxes for gas—the sixth highest in the country and the highest by far in the Southeast.

I have no delusions that serious tax reform will take place in America during my lifetime. After all, it was none other than Benjamin Franklin who coined the phrase, “In this world nothing can be said to be certain, except death and taxes.” But it would be nice if we could hold the folks who spend our taxes to the same business standards that apply in the real world.