This July, Kolbe proposed the 2006 Currency Overhaul for an Industrious Nation (COIN) Act. Clever title, no? This one will again seek to “reduce demand for the penny” via compulsory rounding. It would also require a Government Accountability Office study on alternative composition for the coin, as well as the eventual replacement of the dollar bill with a one-dollar coin.
“Our currency and coinage policies are quite simply pound wise and penny foolish,” punned Congressman Kolbe, who was unavailable for comment for this article, upon the bill’s introduction. “The penny has been a nuisance for years, but now that the cost of a penny exceeds its value, the landscape of the debate has completely changed.”
Like its predecessor, this bill seems destined to croak in committee. But it’s worth noting something that Kolbe often fails to mention in his ceaseless quest to drive the pesky penny from this great land. It’s not just the negative seigniorage (revenue drawn by the government from the difference between the face value of the coin and the cost of production) that has Kolbe steamed. It’s not just, as he plainly puts it, that “the penny has no purpose.”
No, it’s also that Kolbe comes from Arizona, which happens to be the country’s largest copper producer. American pennies used to be made entirely of copper, but they haven’t been since 1856. Nickels, meanwhile, are mostly made of copper; they’re only 25 percent nickel. For those keeping track at home: fewer pennies = more nickels. (Kolbe’s dollar coin would presumably also be made mostly of copper.)
Grassroots penny busters
Of course, it’s not just self-interested politicians stumping for the mercy killing of this pitiable coin. Jeff Gore, 28, is an MIT postdoc and the soi-disant leader of Citizens for Retiring the Penny, or retirethepenny.org. The “group” didn’t actually exist until ABC’s World News Tonight stumbled upon a hasty anti-penny screed on Gore’s blog. “They wanted to interview me, and I figured, well, if I’m gonna go on the air and tell 10 million people they should get rid of the penny, I should at least put up a Web site,” he laughs.
“I am generally a believer in efficiency,” says Gore. “This is just something that has annoyed me over the years: going to the cash register, buying something that’s 95 cents, them telling me that, with tax, it’s a dollar and two cents — and me pulling out a dollar bill and saying, ‘Gee, I wish that this would do it.’ ”
Gore doesn’t harbor any grand illusions about the cosmic importance of his quest. But he does take it seriously. “There are many more important issues out there, but those issues are already being addressed. The Darfur crisis? I do believe the world should do something about it, but me putting up a Web site and arguing the case is not gonna make a bit of difference.”
On the other hand, “I do believe that there is something to be said for citizen advocacy. The pro-penny lobby is well funded by the zinc industry. So they can put up a nice Web site, and they can fund various slanted studies. And to me, this was sort of a microcosm of the wider world of policy.” So he’s doing something. “Lemme say right up front,” he adds wryly, “that Citizens for Retiring the Penny accepts no corporate sponsorship of any kind.”
Why should he need it? After all, the facts speak for themselves. Inflation has rendered the penny’s purchasing power all but nil, unless it’s accompanied by a few dozen or a few hundred friends. The vending machine in your office break room doesn’t take pennies. Neither do those super-duper new Charlie Card dispensers — you know, the ones that are at some T stations but not others. (They do take $10 and $20 bills, however, and spit out Sacajawea golden dollars for change.) Who needs pennies?
Apparently, not many of us. Coinstar — the company behind that supermarket, add-em-up and take-a-cut contraption — estimates that the average American household accumulates $5.50 in change every week (all coins, not just pennies). With about 80 percent of households hoarding coins — and about 25 percent of those doing nothing at all with them — that adds up to $10.5 billion worth of spare change currently sitting on car floors and under couch cushions. (That’s based on an average coin mixture: about one third silver pieces and two thirds pennies.)
This April, Coinstar made it more appealing to get all that money back into circulation, allowing you to exchange your coins at some machines for iTunes gift cards and e-certificates. Even better, unlike the 8.9 percent surcharge they lop off when you try to exchange your change for greenbacks, this is fee-free.
A cool idea, sure. But does that justify their existence? Just up Mass Ave from MIT, Jeff Gore has an ally in the penny wars. “The purpose of the monetary system is to facilitate exchange, but the penny no longer serves that purpose,” Harvard economics professor Gregory Mankiw, a former chairman of President Bush’s Council of Economic Advisers, told the American Spectator this June. “When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful.” (Mankiw was on his way out of town for a week and unable to comment for this article.)