YOUR GOVERNMENT AT WORK

Taxpayers are putting in their two cents worth

The penny is not what is used to be. Congress 25 years ago eliminated most of the copper from the coin due to a big spike in the cost of the metal. Since then, zinc has been the main ingredient — over 97% — with copper being limited to a thin coating into which Abraham Lincoln’s face in engraved. Now, with the price of zinc soaring, it costs taxpayers over 1.7 cents to make each 1-cent coin. In other words, it costs nearly twice as much to make a penny as the thing is worth. The U.S. Mint cranks out roughly 8 billion new ones each year to the tune of well over $100 million annually. (Each nickel also costs about 10 cents in production costs, by the way.) Can you imagine a company continuing to manufacture a product that costs twice as much to produce as it can charge for the product? Just picture a meeting at General Motors where a young, enthusiastic automotive executive provides detailed information about a new SUV that the company would produce at a cost of $40,000 — and market for $20,000. Surely somebody would point out that the young executive had seemingly transposed the figures; that the cost of production and retail appeared to be reversed. Nobody in their right mind would move ahead with such a project …unless they were spending taxpayer money...So why do we keep producing pennies that cost nearly two cents each? As usual, the answer lies in following the money. A Tennessee-based company, Jarden Corp., spends hundreds of thousands of dollars each year lobbying to maintain its highly profitable sole source “penny contract.” That company has been paid more than $170 million from 2004 to 2006 under the contract with the Mint, a contract that can be extended through September 2008 and could reach a total of $450 million....