Obama Pushes For Cheaper Pennies 825
Hugh Pickens writes "Time Magazine reports that hidden deep inside in the White House's $3.8 trillion, 2,000-page budget that was sent to Congress this week is a proposal to make pennies and nickels cheaper to produce. Why? Because it currently costs the federal government 2.4 cents to make a penny and 11.2 cents for every nickel. If passed, the budget would allow the Treasury Department to 'change the composition of coins to more cost-effective materials' resulting in changes that could save more than $100 million a year. Since 1982, our copper-looking pennies have been merely coppery. In the 1970s, the price of copper soared, so President Nixon proposed changing the penny's composition to a cheaper aluminum. Today, only 2.5% of a penny is copper (which makes up the coin's coating) while 97.5% is zinc. The mint did make steel pennies for one year — in 1943 — when copper was needed for the war effort and steel might be a cheaper alternative this time. What about the bill introduced in 2006 that the US abandon pennies altogether.? At the time, fifty-five percent of respondents considered the penny useful compared to 43 percent who agreed it should be eliminated. More telling, 76 percent of respondents said they would pick up a penny if they saw it on the ground."
Comment removed (Score:3, Interesting)
Get rid of them (Score:5, Interesting)
Australia got rid of 1 and 2c pieces years ago and that didn't kill us at all.
That doesn't mean you people don't advertise things at 99 cents, just that you total up the bill and then round to the nearest 5 cents. Sometimes you win (all of 2 cents on a single bill) and sometimes you lose (again, all of 2 cents on a single bill).
We also ditched $1 and $2 paper currency for $1 and $2 coins. That was also a good move in getting rid of those ratty dollar bills. The US cold easily do the same thing as you already have $1 coins in circulation. About the only people who will notice a change are the strippers who will now have use their coin slots.
Re:You can't eliminate them (Score:5, Interesting)
Round here we have a toll booth with coin baskets thats: 40 cents.
That's right - you need at least a quarter, a dime AND a nickle.
Not 50 cents. Not 25 cents. FOURTY.
I'm sure a lot of out of towners just toss in two quarters and have a chuckle at the local chuckleheaded government's tricks.
Re:You can't eliminate them (Score:4, Interesting)
Actually, there's no problem with having $9.99 .
In Europe we've all but done away with the 1 and 2 eurocent coins - their monetary value vs cost involved in handling them just didn't make sense.
But we do still have e.g. â0.99 type prices. The way it works is that your total gets rounded at most placed and almost certainly if you decide to pay by debit card. So if you buy 3 of those â0.99 items, you get a total of â2.97, rounded to â2.95. If you buy two, it gets rounded up and you pay â2.00 instead of the â1.98.
( this is apparently called 'Swedish rounding' when specifically applied to the situation of currency: http://en.wikipedia.org/wiki/Swedish_rounding [wikipedia.org] )
However, if you want to pay with 1 or 2 eurocent coins to match a price exactly, many places will still accept that - but if you pay 'just over' where your return would technically be 1 or 2 eurocent, you won't be getting those.
The places that accept them bring them to the bank, which bring them to bigger banks, which basically have them destroyed - and gradually the 1 and 2 eurocent coins are removed from circulation.
Re:Get rid of coins altogether (Score:2, Interesting)
When my grandfather was young (early 1930's), a typical worker earned $2/day. That worker today earns $160-200/day. So in 1930, any transaction that was less than half a days pay was done in change, and the smallest unit was 1/200th of a days pay. Today that would be like having a smallest paper currency of $80-100 and a smallest coinage of 80cents or $1. Having coins that represent 1/20,000th of a days pay is ridiculous.
Re:Get rid of coins altogether (Score:5, Interesting)
I do this with pre-1982 pennies. [hiresteve.com] I have many rolls of them now, I drop all the pennies I get in change into a jar and every once in a while sort them, roll up the copper ones, and bring the zinc ones to the bank to get counted and deposited. It's not like it's a retirement fund or anything, but it takes just a few minutes every few weeks and my kids help me which is fun, so I figure why not?
Re:You can't eliminate them (Score:5, Interesting)
I heard of this before; the chain restaurant doesn't want to take the hit when rounding down, so they just add the fractions to the next bill and hope nobody notices or cares. The US method of listing raw price then adding sales tax after (do they do this in fast food places?) means that this is difficult for customers to detect..
Re:$0.95 bullshit (Score:4, Interesting)
Well for the record I set my clock an hour and 45 minutes ahead so that I am on time! : )
But yes, $0.95 did seem lower because with 5% MA sales tax before they changed it it was still under a buck, so it was good for impulse sales. (Now that Taxachussetts changed it, it's back to being BS - you have to grab the penny from the Take-A-Penny tray to not bust open a second bill and get a handfull of crappy change.)
But in my opinion the real reason you can't eliminate pennies is that the chaos you'd cause in Accounting would far outstrip the "nicety" of not having pennies. Hell, Nickels are equally silly. Dimes are a close call. I stop my valuation at quarters, which are still good for laundry machines.
If suddenly there were no pennies the entire world would play the Office Space Game of "which way can I pocket the difference to my own benefit."
Re:what's wrong with rounding (Score:2, Interesting)
Regardless, making nickles cheaper that 11 cents per to make seems to be ... well, kinda obvious?
A lot of people seem to think that the cost of currency should some how be related to the face value. But it doesn't matter if a Nickel costs more than 5 cents. It's not like they are one-time use items. I imagine a paper dollar wears out A LOT faster than a penny or nickel -- which is why they try to push dollar coins.
Re:You can't eliminate them (Score:4, Interesting)
Part of that is also carry-over from a past era where taxes were calculated based upon a stair-step-like system (at least in some states), rather than calculated exactly. $9.99 and $10.00 would be in two different brackets, resulting in a greater difference in sales tax than it is now, so it made a meaningful impact to drop the penny.
Of course, it doesn't hurt that there was a psychological effect on the customer as well. That is likely why the practice continues.
Re:You can't eliminate them (Score:5, Interesting)
The ad says $9.99 plus sales tax which they often say anyway and tags used within the store are printed locally. It is doable but no store would consider it unless it's forced on them which I suspect the government does no want. It's easier to hide sale tax spikes from people when they can see up front that the cost has risen.
In their defence, IMHO they have a legitimate reason to do this- their locally-printed/local-only prices would appear more expensive against nationally-advertised prices that (as mentioned above) don't include sales tax because it varies across the US.
Yes, maybe people should notice that the national price excludes sales tax and the local one doesn't, but in practice enough people won't that it puts the latter at a competitive disadvantage.
(FWIW I live in the UK where consumer-oriented prices *are* usually quoted with VAT (i.e. sales tax) included and prefer it that way- but that's because we have uniform VAT across the country. I understand why the US doesn't include it.)
Re:You can't eliminate them (Score:2, Interesting)
Sorry buddy, you lost this argument 230 years ago. America would not be the #1 world power without the strong federal government. That's why we have the Constitution instead of the Articles of Confederation.
Re:You can't eliminate them (Score:5, Interesting)
The way to do this in the U.S. would be as follows:
This would have several advantages. It would eliminate the current advantages that online stores have over brick-and-mortar retailers. (Someone buying at Amazon or Newegg would pay a price with the 7% included, just like someone buying at B&N or Fry's.) It would make it easier for consumers to figure out how much something is actually going to cost them out-of-pocket. And you know what? If a business feels that the 99-cent or $4.99 or $9.99 or $99.99 price point is important, they'll figure out a way to reduce the cost of their product so it hits that price point even with tax already included. So, in the long run, it is likely to save consumers money.
Re:You can't eliminate them (Score:5, Interesting)
It should be noted that before the Civil War, "United States" was plural - "these United States". Afterwards, it was singular - "the United States".
Re:You can't eliminate them (Score:4, Interesting)
Here in Germany, we pay the price as displayed, no matter how we pay. I actually expect that!
Everything else seems stupid, not?
Re:You can't eliminate them (Score:4, Interesting)
Sorry, but some of us (Oregon) have no sales tax, and definitely do not want one.
What I see on the shelf is exactly what I pay.
Re:You can't eliminate them (Score:4, Interesting)
In other countries this is solved by laws demanding that all prices advertised to individuals (as opposed to companies) or where the target customer is clearly an individual include sales tax. So prices including the sales tax are conveniently set to nice round numbers.
Sweden just had an issue where including the tax in the price caused recently reduced taxes to not get passed to the customer.
Restaurants had a tax reduction from 25% to 12.5%. Since the tax was already included in the price, none of the restaurants reduced the prices and just pocketed the profit. If the price shown was pre-tax and the tax added in tally, the customer would have received the tax break.
The only ones that actually reduced their prices was the large food chains. Most likely because watch dog groups were making sure of this.
Re:Why rounding up to a nickel may SUCK. (Score:4, Interesting)
Rounding works both ways, you know.
Re:You can't eliminate them (Score:3, Interesting)
Of course, there's a trade-off to not tipping, such as the astonishingly poor service that Europeans seem to take for granted at anything less than very high-end dining establishments. Now, it doesn't seem to bother you all so you might as keep it the way it is. Americans, on the other hand, seem to place a much higher value on careful and conscientious service, and that's why our pay structure for servers is the way it is--to promote that good service.
The habit is so ingrained in us that it's very difficult to _not_ tip when traveling abroad. It just seems terribly rude. I wish however that Europeans were more willing to adopt to local norms when coming to the US. I have several friends and family members who either do now or or have worked as servers, and when a visiting European declines to conform to local custom and stiffs a server even when he or she received good service... well you've just done the equivalent of taking money out of that server's paycheck for the night.
I realize how strange it is to visitors, but this is just the way our society is. It's a social contract, and it is taken very seriously. If one feels that strongly about it, you should either stick to fast food or buy food from the grocery and prepare it yourself, or better yet, stay home and don't travel to places where the customs bother you so much.
Re:You can't eliminate them (Score:5, Interesting)
True story...
On returning from a lunch break, my coworkers and I were talking about if anyone would pick up a penny in the parking lot. Most would not, some would. So the question - how much would someone have to pay you to pick up a penny (for those that normally would not). We worked in IT at a call center. We came up with an testing idea...
The bathroom was filthy - it's a call center. We put a two quarters in each urinal. Then we went back to check on it 30 minutes later. How long would it take for those piss covered quarters to be picked out of the urinals?
First check (30min), they were all gone.
So we just put a single quarter in there, and re-checked in 15 minutes. It was gone already.
So we put a dime in one, a nickle and 2 pennies in another, and a penny in another. In 15 minutes, the dime and nickle were gone, but the pennies remained. We checked again about 20minutes later, and the group of pennies was gone, but the lone penny remained. We were working too, and if memory serves, we missed the next scheduled check, but the all change was gone on the next check.
We continued playing with amounts throughout the following days. Quarters went very very quickly, as if no one had any reservations on fishing them out of a well used urinal. We had been thinking that, just maybe, we got unlucky with the timing, and the cleaning staff was grabbing them... but we were all eventually 100% convinced that was not the case - they went to fast, and too often, and cleaning staff didn't make rounds anywhere near that much.
We spent about 2 weeks of randomly tossing loose change in urinals and cracking up about how it vanished so quickly into the hands of call takers - all using shared phones, keyboards, mice, etc. We were having a swell old time with it.
Then one day, we were in the common breakroom, and one of us bought a soda with a dollar. They got back 30 cents in change (a quarter and a nickle), and readily picked it up and pocketed it. Two and two became four in my head.... I asked my coworker where he thought that change came from.
We stopped putting change in the urinal that day, and took a long hiatus from grabbing the change from the vending machine.
If you ever see someone leaving their change in a vending machine, think twice before you judge them :-)