The U.S. Mint makes a lot of coins -- 13 billion in 2014 alone -- and shaving even a tiny fraction off the cost of making them could mean big savings for the U.S. government.
A recent report by the Government Accountability Office suggests that altering the recipe for the nation's coins could save anywhere from $8 million to $39 million, depending on how big a change the Mint makes.
While the move could save taxpayers a decent chunk of change, industry groups that depend on machines that accept coins, such as laundromats and arcades, warn that a new metal mix would cost them billions.
Cost of coining ain't chump change
Right now, the monetary value of pennies and nickels is far below what it costs to make them, meaning the Mint issues the coins at a loss. Unfortunately, no amount of cost-cutting is going to help the penny in this regard -- the Mint already uses the cheapest materials available to make them and still runs them at a loss. (That's why, if we were smart, we'd scrap the penny altogether.)
But by changing the mix of metal in U.S. coins from pricey copper to cheaper materials, primarily steel, the Mint could save a lot on quarters, nickels, dimes and pennies, according to the GAO report. For instance, the government currently spends $98 million a year coining nickels, which by order of Congress, are 75% copper and 25% nickel. It costs 8.1 cents to make a nickel with these materials. But if we made them out of multi-ply stainless steel, it would only cost 5.5 cents, saving the U.S. Mint $31.7 million a year.
Change we can't believe in
Of course, the resulting product may not be identical in weight, thickness, magnetism or electromagnetic signature, all of which are used by vending machines to determine whether that coin you just shoved in the slot is a genuine coin or a washer you're trying to pass off as one. Replacing the mechanisms that recognize coins could cost as much as $10 billion, according to industry groups, although the GAO contends the cost is much lower, somewhere around $450 million.
As a compromise, the U.S. Mint has created an alternative mix that would work in most machines. It won't save as much -- only $8 million a year -- but it also won't incur as much cost for U.S. companies, and thus make as many enemies in Congress.
In fact, even the $39 million savings plan is somewhat of a watered-down compromise on the original plan. The U.S. Mint had originally explored changing the quarter to stainless steel, saving a whopping $83 million a year. Mint researchers realized, however, that doing so would make the quarter too similar to less-valuable foreign coins.
What do you think? Should we change the mix of U.S. coins and thereby stick U.S. companies with a substantial bill? Are years of savings to taxpayers worth a one-time switching cost?
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