In a significant move aimed at fiscal efficiency, President Donald Trump has announced plans to stop the production of the U.S. penny. Citing the high costs associated with minting the coin, the President stated, “For far too long, the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! I have instructed my Secretary of the US Treasury to stop producing new pennies.”
The Cost of Minting Pennies
The U.S. Mint’s 2024 annual report revealed that producing a single penny costs approximately 3.69 cents, significantly exceeding its face value. This discrepancy results in substantial financial losses; in 2024 alone, the Mint shipped 3.17 billion new pennies, incurring a gross cost of $117 million against a face value of just $31.7 million.
Support and Criticism
Kevin O’Leary, entrepreneur and star of “Shark Tank,” supports the decision, stating, “It’s stupid. Why would you pay $0.02 for a commodity that’s worth one?”
However, not everyone agrees. Mark Weller, Executive Director of Americans for Common Cents, argues that eliminating the penny could lead to increased production of nickels, which also cost more to produce than their face value. He suggests that “any structural change to US coinage should include revamping … .”
Impact on Consumers
For most Americans, the immediate impact of this decision is expected to be minimal. Existing pennies will remain in circulation, and cash transactions may be rounded to the nearest five cents, a practice already adopted in countries like Canada. Economist David Bahnsen notes, “I don’t think it’s gonna have any impact on consumers. I think it’s just a very sensible thing to do, because nobody uses pennies anymore.”
Historical Context and Future Considerations
The penny has been a part of U.S. currency since 1792, but its utility has diminished over time due to inflation and changing consumer habits. The move to discontinue the penny reflects a broader trend of reevaluating the cost-effectiveness of low-denomination coins. As the U.S. Treasury implements this change, discussions may also turn toward the future of other coins, like the nickel, which also cost more to produce than their face value.
In conclusion, while the penny has long been a staple of American currency, its production has become economically impractical. President Trump’s decision to halt its minting aims to reduce wasteful spending and modernize the nation’s coinage system. For everyday Americans, this change is unlikely to cause significant disruption and may even simplify cash transactions in the future.
