Cheaper MoneyOctober 4, 2010 - by Donny Shaw
In the final days of the pre-election congressional session, the combination of everybody in Congress wanting to do something to boost the economy while at the same time being unwilling to go near anything that would add to the deficit led to some creative legislating.
You’ve probably heard about the bill that the House passed last week (H.R.2378) to put tariffs on Chinese imports in order to pressure them into letting their currency appreciate. Well, on the same day they voted on that bill, they passed something else designed to help the economy that has gotten less attention. That bill, the “Coin Modernization, Oversight, and Continuity Act of 2010,” is aimed at giving the Treasury Department authority to take a look at an obscure issue in our monetary system, the fact that it’s costing the government these days nearly 2 cents to make a penny and nearly 10 cents to make a nickel.
The bill calls on the Treasury to conduct research into new, less expensive materials that could be used for producing coins, and to report their findings to Congress within 2 years. The bill specifically states that, “to the greatest extent possible, [the Secretary of the Treasury] may not include any recommendation for new specifications for producing a circulating coin that would require any significant change to coin-accepting and coin-handling equipment.” That language has caused the only really relevant industry here, vending machines, to give the bill their full endorsement.
The bill would still have to be passed by the Senate in the lame-duck session if it is to become law.
According to Dan Tangherlini, the Treasury Department’s chief financial officer, “making coins from more cost-effective materials could save more than $100 million a year.” To put that in context, we have been spending about $1.8 billion on national defense per day in 2010. That’s almost 2,000 times more each day than we would be saving over the course of an entire year by making coins cheaper. Not that we shouldn’t do it, just saying… a better reason might be that millions of people are allergic to nickel (the most commonly used metal in coins) and get itchy rashes when they touch change for too long.
Penny pic from Dystopos used under a CC license.