Congress looking at steel pennies and nickels

WASHINGTON (AP) -- Further evidence that times are tough: It now costs more than a penny to make a penny. And the cost of a nickel is more than 7˝ cents.

Surging prices for copper, zinc and nickel have some in Congress trying to bring back the steel-made pennies of World War II, and maybe using steel for nickels, as well.

"If we continue minting coins with the current metal content, with each new penny and nickel we issue, we will also be contributing to our national debt by almost as much as the coin is worth," said Rep. Luis Gutierrez, D-Ill., who chairs the House panel that oversees the U.S. Mint.

Copper and nickel prices have tripled since 2003 and the price of zinc has quadrupled, said Gutierrez.

A penny, which consists of 97.5 percent zinc and 2.5 percent copper, cost 1.26 cents to make as of Tuesday. And a nickel — 75 percent copper and the rest nickel — cost 7.7 cents, based on current commodity prices, according to the Mint.

That's down from the end of the 2007, when even higher metal prices drove the penny's cost to 1.67 cents, according to the Mint. The cost of making a nickel then was nearly a dime.

Gutierrez estimated that striking the two coins at costs well above their face value set the Treasury and taxpayers back about $100 million last year alone.

A lousy deal, lawmakers concluded as the House moved toward a vote Tuesday that directs the Treasury secretary to "prescribe" — suggest — a new, more economical composition of the nickel and the penny.

Unsaid in the legislation is the Constitution's delegation of power to Congress "to coin money (and) regulate the value thereof."

The Bush administration, like others before, chafes at that.

Just a few hours before the House vote, Mint Director Edmund Moy told House Financial Services Chairman Barney Frank, D-Mass., that the Treasury Department opposes the bill as "too prescriptive" in part because it does not explicitly delegate the power to decide the new coin composition.

The bill also gives the public and the metal industry too little time to weigh in on the new coin composition, he said.

"We can't wholeheartedly support that bill," Moy said in a telephone interview. Moy said he could not say whether President Bush would veto the House version in the unlikely event that it survived the Senate.

Sen. Wayne Allard, R-Colo., who is retiring at the end of the year, is expected to present the Senate with a version more acceptable to the administration in the next few weeks.

The proposals are alternatives to what many consider a more pragmatic, but politically impossible solution to the penny problem: getting rid of the penny altogether.

"People still want pennies, which is why we're still making them," Moy said.

Even Treasury Secretary Henry Paulson acknowledged in a radio interview earlier this year that getting rid of the penny made sense but wasn't politically doable — and certainly nothing he is planning to tackle during the Bush team's final months in office.

In 2007, the Mint produced 7.4 billion pennies and 1.2 billion nickels, according to the House Financial Services Committee.

Other coins still cost less than their face value, according to the Mint. The dime costs a little over 4 cents to make, while the quarter costs almost 10 cents. The dollar coin, meanwhile, costs about 16 cents to make, according to the Mint.