Tuesday, October 25, 2011

Here's My Two Cents for Counting Out the Penny (February 21, 2008)

The phrase "a penny for your thoughts" has little meaning these days, especially when inflation devalues the one-cent coin year after year.
  Like eight-track audio cassettes decades ago and the gradual elimination of the videocassette recorder in favor of its DVD or Blu-Ray equivalent, the penny could eventually vanish and become a cultural relic. Then, the coin would only be of interest to numismatists (There's a word I'd never thought I'd ever use in a column.) and penny hoarders. Some believe the latter group is squirreling them away more than ever these days since metal prices keep rising.
If the penny becomes extinct, the same fate would eventually devalue such maxims as "penny-wise and pound-foolish," "in for a penny, in for a pound," something costs "a pretty penny," "penny ante," "he doesn't have two pennies to rub together" or "a penny saved is a penny earned." And you'll certainly never hear anyone utter, "a bad penny always turns up" if the coin fades away.
Been to a Penny Arcade lately? Nothin's a penny  or a nickel or a dime - anymore and hasn't been for decades. But Quarter Arcade just doesn't have the same ring to it.
Do we really need the penny anymore? There's nothing you can buy with it. When I was growing up, you could at least get a piece of Bazooka bubble gum or stick of licorice for a cent. But, that was decades ago - in people years.
In 1943, at the height of World War II, copper was in demand for the war effort, so the cent coin was minted with zinc-coated steel. The following year it was made of brass  a mixture of mostly copper and zinc. That combination lasted until 1982 when it was minted with 97 percent zinc and a copper plating to maintain its traditional appearance. The cost of zinc has tripled in the last few years, so if the penny remains in circulation another change in metals might be looming.
It is estimated the government spends 1.67 cents for every one-cent coin it produces. In other words, for the last couple of years, the U.S. Mint has been spending more than they're worth. More than $115 million of our tax dollars is spent every year for new pennies. That averages out to more than $40 per person. Do you know what you can buy with 40 dollars? Actually, not much, but 40 bucks is 40 bucks.
Can anyone rationally explain why the government remains engaged in such an endeavor? Isn't it typical of our government to get bogged down in something that keeps losing money for no logical reason? Perhaps they simply don't want to admit it's a mistake and they're losing the Penny War.
According to the U.S. Mint Web site, there are more than 150 billion cent pieces currently in circulation (that's $1.5 billion). Someone figured that if all those pennies were stacked on top of each other they would rise about 1,000 miles. Last year, the U.S. Mint reported it produced well over eight BILLION pennies - more than any other coin minted.
Since producing pennies costs the government more money than they are worth, and despite the fact they are still in demand by retailers and banks, maybe it's time to start pinching pennies.
Nonetheless, there's little chance the one-cent coin will be out of circulation anytime soon. The U.S. Mint has grandiose plans to redesign the penny next year for Abe Lincoln's 200th birthday and the centennial of the Lincoln penny. By the way, Lincoln was the first president whose image was put on a U.S. coin.
Still, a few efforts to phase out the penny by Congress, most recently in 2006, have failed. However, the legislation in which that issue was incorporated, included the transfer of control of the Mint and the Bureau of Engraving and Printing from the Department of Treasury to the Federal Reserve.
Perhaps the biggest obstacle to eliminating the penny would be if businesses had to round off the cost of an item, mostly due to sales tax charges. Either they or the consumer would lose money on each transaction, depending on whether the total would be rounded up or down. So, before the penny is retired that issue, more than any other, would have to be resolved.
In a recent "60 Minutes" segment on this matter, a group called "Americans for Common Cents" figured that the rounding up or down would cost the economy about $600 million a year, which, they contend, would hurt those that can least afford it. "The ones that don't have checking accounts or charge cards."
"Freakonomics" author Stephen Dubner said in the same piece that Americans suffer from a love affair with the one-cent coin, which he calls "pennycitis." He said it would be "hard to get rid of something that has been ingrained" and has become a sentimental part of our society.
Sentiment, schmentiment, I unload my pennies as often as possible. The coin that's most needed these days is the quarter  for washing machines and parking meters. Pennies, nickels and dimes just take up space in my pocket!
Just a suggestion. Never ask me for a penny for MY thoughts. Mine  in all modesty  are worth at least a nickel!
Well, that's my two cents worth  for now.