By: Eric Morath
Treasury Secretary Tim Geithner outlined how his department will find savings, including $286 million in the next fiscal year, by changing the materials that go into coins, replacing paper with electronic communications and consolidating internal agencies.
The effort to find efficiencies is part of a broader effort by the Obama administration to reduce budget deficits by $4 trillion over the next 10 years.
Geithner, in written testimony prepared for the House Committee on Appropriations, said a good portion of next year’s savings at Treasury will come from changing the composition of U.S. coins to more cost-effective materials.
“Currently, the costs of making the penny and the nickel are more than twice the face value of each of those coins,” Geithner said in his remarks.
The cost of making pennies and nickels are about twice the face value of the coins–2.4 cents for a penny and 11.2 cents for a nickel, the Treasury Department said earlier this month. Rising commodity prices have driven higher production costs. The Mint said it used 16,365 tons of copper, 2,311 tons of nickel and 11,844 tons of zinc to produce all coins in fiscal year 2011.
Changing the makeup of coins and improving the efficiency of currency production will save more than $75 million in the next fiscal year. In addition, the suspension of presidential dollar coin production, announced in December, will save another $50 million.
Geithner said the department is also finding savings by encouraging electronic communication instead of paper. For example, this year 77% of taxpayers will file returns online. Treasury has saved $63.9 million since 2009 by encouraging electronic filing.
Treasury is also working to consolidate the Bureau of the Public Debt and the Financial Management Service. This consolidation will save $36 million over five years, Geithner said.
Geithner said the broader deficit reduction plan outlined in the president’s 2013 budget is “sufficient to stabilize our debt as a share of the economy by 2015.”
DEBASEMENT: Treasury to Cut Costs by Remaking Coins,