What the 2.4-Cent Penny Says About America's Budget Problem
It turns out that the humble penny is a pricey coin. Specifically, each new penny coined by the government costs 2.4 cents.
My point here is not to remind you that pennies are anachronisms that ought to be dispensed with entirely—though that is true. This is actually a story about the federal budget, and why it’s so tough to manage.
Yesterday, President Obama unveiled his budget for 2013—a plan for everything that the government will spend money on and where it intends to get that money. I won’t bore you with the details, since this document won’t survive first contact with Congress and doesn’t offer a final picture of what government activity will look like next year, although it does reveal a lot about what the president thinks is important.
One good idea in the budget is to change the way we make those expensive pennies and nickels (which cost 11.2 cents each), using cheaper metals to do the job. Pennies are now made mostly of zinc, and nickels have more copper than nickel. If we switch up the raw materials—perhaps to an aluminum alloy, like other advanced economies, or else industrial porcelain—the Treasury Department estimates we could save about $100 million a year.
Of course, $100 million a year sounds awesome, but in budget terms it’s a tiny amount of money—less than one-100th of 1 percent of the entire $3.7 trillion the president proposes spending next year. But like everything that matters, budgeting is a game of inches, so lopping off small stuff—especially no-brainer waste like this—is a good way to find breathing room as you work your way up to the big stuff
Read the rest of the article here
My point here is not to remind you that pennies are anachronisms that ought to be dispensed with entirely—though that is true. This is actually a story about the federal budget, and why it’s so tough to manage.
Yesterday, President Obama unveiled his budget for 2013—a plan for everything that the government will spend money on and where it intends to get that money. I won’t bore you with the details, since this document won’t survive first contact with Congress and doesn’t offer a final picture of what government activity will look like next year, although it does reveal a lot about what the president thinks is important.
One good idea in the budget is to change the way we make those expensive pennies and nickels (which cost 11.2 cents each), using cheaper metals to do the job. Pennies are now made mostly of zinc, and nickels have more copper than nickel. If we switch up the raw materials—perhaps to an aluminum alloy, like other advanced economies, or else industrial porcelain—the Treasury Department estimates we could save about $100 million a year.
Of course, $100 million a year sounds awesome, but in budget terms it’s a tiny amount of money—less than one-100th of 1 percent of the entire $3.7 trillion the president proposes spending next year. But like everything that matters, budgeting is a game of inches, so lopping off small stuff—especially no-brainer waste like this—is a good way to find breathing room as you work your way up to the big stuff
Read the rest of the article here
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