Trump Tells Treasury Department to Cease the Production of the U.S. Penny

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President Donald Trump has instructed Treasury Secretary Scott Bessent to halt the production of the U.S. penny, citing the high cost of manufacturing. The President noted that the cost to produce a single penny far exceeds its face value. This in turn sparked a debate on whether retiring the penny is a practical economic decision or a sentimental loss.

The Cost of Producing a U.S. Penny

The U.S. Mint reported that in fiscal year 2024, it cost approximately 3.7 cents to produce and distribute a single penny—a more than 20% increase from the previous year. The rising costs are primarily driven by the increased prices of raw materials like zinc and copper. Since pennies are composed of 97.5% zinc and 2.5% copper, fluctuations in metal prices heavily influence production costs.

In 2023 alone, the U.S. Mint circulated about 4.1 billion pennies, resulting in a loss of roughly $85.3 million. This means that each penny minted last year represented a net loss of 2.7 cents to the government. Despite these losses, pennies accounted for more than half of all coins produced by the Mint, with around 250 billion pennies in circulation—equivalent to about 700 pennies per person in the U.S.

The U.S. Penny’s Manufacturing Process

Producing a penny involves multiple steps. First, raw zinc and copper are melted down and formed into large sheets. These sheets are then punched into blank discs, which are heated, softened, and stamped with the familiar image of Abraham Lincoln. The final product is inspected for quality before being distributed to banks and businesses across the country.

However, the inefficiencies in this process are becoming more apparent as material and labor costs rise. The cost of transporting and handling pennies adds to the overall expense, making their continued production increasingly unjustifiable.

Historical Context and Global Trends

The U.S. isn’t the first country to reconsider the value of its smallest-denomination coin. In 2012, Canada stopped producing pennies, citing similar concerns about production costs and inefficiencies. Cash transactions in Canada are now rounded to the nearest nickel, a change that saved millions of dollars annually. Australia made a similar move in 1992, withdrawing one- and two-cent coins from circulation without significant economic disruption.

Other countries like Sweden and New Zealand have also eliminated their smallest coins, with minimal impact on their economies. These examples suggest that the U.S. could follow suit without major consequences and potentially save millions of dollars each year.

Is Retiring the U.S. Penny a Wise Decision?

Trump’s decision to halt penny production aligns with broader economic logic. Given that the penny’s purchasing power has diminished significantly due to inflation, its continued production seems more rooted in sentimentality than practicality. The argument that eliminating the penny would impose a hidden “one-cent tax” on consumers is countered by the fact that cash transactions could simply be rounded to the nearest nickel, as seen in other countries.

However, some critics argue that halting penny production could lead to increased demand for nickels, which are even more expensive to produce at 13.78 cents per coin. Additionally, there’s concern about the cultural and historical significance of the penny, with some Americans viewing it as a symbol of national heritage.

A Final U.S. Penny For Your Thoughts

While the U.S. penny holds sentimental value, the economic realities of its production costs make a strong case for its retirement. By halting penny production, the government stands to save millions of dollars annually, aligning with Trump’s broader agenda to reduce unnecessary government spending. Given the experiences of other countries that have eliminated their smallest coins without adverse effects, this move appears to be a practical and fiscally responsible decision.

Is it time to let go of the U.S. penny? Tell us what you think!

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