President Donald Trump has instructed the Treasury Department to cease minting new pennies, pointing to the increasing cost of producing the one-cent coin. This move comes as a response to the inefficiency of minting pennies that cost more than their face value. The decision aims to address the wasteful expenditure associated with minting pennies that exceed their value.
Concerns Over Rising Costs
The U.S. Mint reported a loss of $85.3 million in the 2024 fiscal year due to the production of nearly 3.2 billion pennies, each costing around $0.037 to produce. This represents a significant increase from the previous year's cost of $0.031 per penny. Similarly, the nickel also proves to be a costly coin, with each $0.05 coin costing nearly $0.14 to manufacture.
Potential Ramifications
While the decision to eliminate the penny rests with Congress, there are arguments suggesting that the Secretary of the Treasury could halt the minting of new pennies without congressional approval. Economists like Robert K. Triest have speculated on the process of discontinuing the penny and the potential savings it could generate.
Various proposals have been put forth by members of Congress to address the issue, including the suspension of penny production, its removal from circulation, or the implementation of rounding prices to the nearest five cents. Advocates for eliminating the penny highlight cost savings, quicker transactions at checkout counters, and the precedent set by other countries like Canada, which ceased minting its one-cent coin in 2012.
Historical Precedent and Fiscal Responsibility
The removal of the penny would not be unprecedented, as the U.S. previously discontinued the half-cent coin in 1857. President Trump's administration, under the leadership of Elon Musk, is focused on cost-cutting measures, aiming to achieve substantial savings across government agencies and operations.
By addressing even seemingly minor expenses like the penny, the administration seeks to streamline the budget and promote fiscal responsibility. This decision reflects a broader effort to identify areas of inefficiency and waste, with the ultimate goal of significant financial savings.