Pennies and Nickels Cost More Than Their Worth

The U.S. Mint says each penny now costs 1.23 cents to produce. It’s 5.73 cents for a nickel. For the first time in history, these coins cost more money than they’re worth — literally. In short, the government is losing money by printing pennies and nickels at all. The Mint points to the rising prices of copper, zinc and nickel as the culprit. The increases have boosted the Mint’s costs by 10 to 20 percent, depending on the coin. "We have actually increased our efficiencies and lowered production costs … over the last few years, but the rising cost of metal has superseded that," Becky Bailey, a U.S. Mint spokesperson, told ABC News. The penny’s new extravagance has re-motivated some of its foes. Rep. Jim Kolbe (R-AR) has plans to reintroduce legislation to get rid of the one-cent piece, rounding prices to fit the nickel instead. Though his Legal Tender Modernization Act didn’t pass in 2001, Kolbe is ready for another try. "If my legislation doesn’t become law this year, I guarantee something similar will become law when people start melting down their pennies and selling the metal back to the U.S. Mint," Kolbe said in a statement. But the tiny penny has some big friends. Virgin Mobile has enlisted none other than Britney’s hubby Kevin Federline in a campaign to save the penny, which coincides with the company’s promotion of one-cent text messages. A full-page ad on the back of Wednesday’s New York Times business section proclaimed, "New legislation will attempt to do away with the penny. What’s next, puppies and rainbows too?" Virgin Mobile has teamed with Americans for Common Cents, an interest group established to protect the Lincoln coin. And policy director Matt Eggers told ABC News that he doesn’t think the penny is going anywhere soon. He says metal prices should decrease over time, making the penny’s production costs revert back to previous levels. That’s 97 cents for fiscal year 2005. Among Eggers’ reasons for the penny’s survival are charities that raise money through penny drives as well as fears of a "rounding tax," resulting from the coin’s elimination. Plus, he said, polls have shown about two-thirds of Americans want to keep pennies around. "The key thing that I think people mistakenly try to assume is that because one cent might not buy you x-y-z, it’s irrelevant," Eggers said.