Trump directs Treasury Department to cease minting pennies
For years, the United States has been spending more than 2 cents to produce a penny, making it a wasteful expense. Recently, the topic gained traction after Elon Musk's Department of Government Efficiency drew attention to the issue on social media. Donald Trump also voiced his opinion, requesting his Secretary of the Treasury to halt production of new pennies to reduce the nation's budget.
The New York Times Magazine argued last year that the necessity of abolishing the penny had been evident for a long time, but its elimination remained elusive. According to CNN, the US Mint reported circulating around 4.1 billion pennies in 2023, and the cost to produce and distribute each penny rose to 3.7 cents in 2024 from the previous year. The steadily increasing price of metals such as zinc and copper contributes to this cost escalation.
Even going further back, a Brooking Institution commentary piece from 2013 suggested discontinuing not only pennies but nickels as well. The argument stemmed from the belief that the increased efficiency and cost savings from eliminating these coins could be substantial. In fact, handling pennies is an expensive process and wastes a significant amount of time for individuals, estimated to amount to around $1 billion annually for all Americans.
Moreover, several factors contribute to the desire to eliminate the penny. The coin's negative seigniorage, or the fact that it costs more to produce than its face value, is a major reason. Additionally, pennies are not widely accepted for vending machines, toll booths, or bulk transactions, and often fall out of circulation or are discarded by consumers, leading to inefficiency.
Recent advocacy by influencers like Elon Musk has rekindled public interest in remedying this issue. However, despite the mounting evidence and growing support, the fate of the penny remains uncertain.
- Source 1: usmint.gov
- Source 2: cnn.com
- Source 3: usmint.gov
- Source 4: usmint.gov
- Source 5: investing.com
The U.S. Mint reported that it costs approximately 2.72 cents to mint a penny in 2022, but the total cost, including distribution and overhead, can rise to around 3.7 cents per penny. These costs have led to a push to eliminate or stop producing the penny due to negative seigniorage, efficiency and cost savings, limited utility, and inefficiencies in handling pennies. Recent calls to action by figures like Elon Musk have brought renewed attention to this issue.
Businesses often face challenges when dealing with pennies due to their high production and handling costs. For instance, a fast-food chain might spend hundreds of thousands of dollars annually on coins, negatively impacting their bottom line.
Despite the financial burden, many retailers continue to rely on cash transactions, making the penny's elimination a complex business decision.
