- The Washington Times - Monday, August 13, 2001

Rep. Jim Kolbe, Arizona Republican, wants to send the penny the way of the halfpenny, bit, two-cent piece and three-cent piece. He wants it to become a relic, vestigial only in anachronistic rhetoric.
Mr. Kolbe says the penny, officially called a one-cent piece, is outdated. "Pennies have virtually no value," Mr. Kolbe said.
Penny lovers say he is just looking out for a local constituency, Arizona's copper industry, because nickels and other coins contain more copper than does the penny, which is made mostly of zinc.
Mr. Kolbe would not banish the penny outright, but proposes a retail rounding system to force it into obsolescence.
Under legislation he introduced last month, cash transactions would be rounded to the nearest nickel. If the total price ended with a 1, 2, 6 or 7, it would be rounded down. If it ended with a 3, 4, 8 or 9, it would be rounded up. For example, if two candy bars and a soda cost, after tax, $2.02, the customer would be charged $2.
Mr. Kolbe is supported by the Coin Coalition, a group backed mostly by convenience stores and other retailers. They say pennies are time-consuming to dispense as change, costly to count and roll at day's end, and cumbersome to take to and from the bank.
Coinstar, a company that counts change for profit, disagrees. So does Common Cents, an interest group dedicated to saving the penny.
Common Cents argues that eliminating the penny will erode consumer confidence in the economy, hurt charities that rely on penny drives, and allow businesses to game prices to charge consumers more.
A study by Pennsylvania State University economics professor Raymond E. Lombra estimates that consumers would pay an extra $600 million a year as a result of rounding. Supporters of rounding say Mr. Lombra's study includes at least one major mathematical error and makes tortured assumptions to reach that conclusion. The study considers only purchases of one to three items, assumes none of the items is for a product sold by weight or volume such as produce or gasoline, and ignores the "randomizing effect" of sales tax.
Opponents of his bill say that Mr. Kolbe's concern is not currency modernization, but copper one of his home state's big exports. Nickels, dimes, quarters, half-dollars and dollar coins are made up mostly of copper. One of the world's leading producers of copper is Phelps Dodge, based in Phoenix.
The penny is composed of 97.5 percent zinc and just 2.5 percent copper.
"He's doing this for one special-interest group," said Peter Mirijanian, spokesman for the Lincoln Coalition, another pro-penny group.
Mr. Kolbe's office says that is preposterous. The amount of copper used in coins is minuscule compared with other uses.
Eliminating the penny would not hurt zinc mines because Americans consume far more zinc than is domestically produced, according to the Bureau of Mines and the GAO.
But the legislation would have a big impact on two companies that take zinc and cut the penny blanks, which then are shipped to the U.S. mints to be pressed into pennies.
Alltrista Zinc Products, of Greenville, Tenn., says it would be forced to fire 112 of its 280 employees, according to the GAO. LaSalle Rolling Mills, of Lasalle, Ill., says it would be shuttered after being forced to fire 94 of its 110 employees.
A letter circulating on Capitol Hill in opposition to the Kolbe legislation was signed predominantly by lawmakers from Tennessee and Illinois.
Polls on the subject vary. A poll commissioned by Common Cents found that 76 percent of Americans support keeping the penny in circulation. Conversely, a survey conducted for the General Accounting Office found that 52 percent of Americans like the idea of rounding to the nearest nickel.
The GAO survey is part of a study completed in 1996 that also shows producing pennies costs the government $8 million to $10 million a year.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide