President Donald Trump of the United States has instructed the Treasury to halt the production of new pennies, bringing back a long-standing discussion about the worth of the one-cent coin.
In a statement on his Truth Social platform dated February 9, Trump described the penny as “wasteful” due to its production cost exceeding its actual value as currency.
“Let’s eliminate waste from our great nation’s budget, even if it’s one penny at a time,” he remarked.
Why is there a push to retire the coin?
Although the penny holds a value of just one cent, producing each one costs nearly four cents, as per the US Mint. This expense stems from the raw materials, primarily zinc, and the manufacturing process involved.
In 2024 alone, 3.2 billion pennies were minted, which results in a hefty production expenditure of $12.8 billion.
The original penny, first issued in 1793, has lost relevance over centuries of inflation, making it nearly obsolete. Its value has diminished to the point where it can no longer reliably purchase even the cheapest items, like gumballs or single pieces of candy.
“People don’t want them. They don’t use them,” stated Larry Jackson, a 65-year-old coin dealer based in Atlanta, in a conversation with Reuters. “They store them away in cans, drawers, and jars… Even a 30-pound bag won’t yield $50.”
Additionally, the use of pennies tends to slow down retail transactions. According to a 2006 study from the National Association of Convenience Stores, if cashiers could bypass counting pennies, they would save approximately 2.5 seconds per checkout.
Is there a case for keeping it?
Indeed. Some proponents of the penny argue that it plays a role in maintaining price stability.
They suggest that businesses might be more inclined to round prices upward without the penny, potentially leading to slight inflationary pressures.
Furthermore, they claim that pennies are a crucial source of funding for charities: Each small contribution counts towards a larger sum.
Others caution that eliminating the penny could lead to an increased production of nickels, which are an even heavier financial burden, costing 13 cents each to make despite being worth only five cents.
Nonetheless, the consensus among most economists is that removing the penny would have minimal impact on consumers, as the majority of transactions are already conducted cashlessly.
“I believe that at some point in history retiring the penny would have been more significant, but nowadays, people hardly carry them,” noted economist Sean Snaith. “They are largely absent from circulation.”
Have other nations attempted to eliminate the penny?
Yes, countries such as Canada, New Zealand, Australia, and the Netherlands have phased out their smallest denomination coins.
When Canada ceased penny production in 2013, it reportedly saved about $11 million each year, according to the Canadian government. Many retailers began rounding cash transactions to the nearest five cents, while the government collected and recycled the pennies for their copper and zinc content.
US lawmakers have long supported similar initiatives. Since 1989, the late Congressman Jim Kolbe from Arizona led a prolonged effort to abolish the penny, introducing several unsuccessful bills. “The penny has been a nuisance for years,” he expressed in 2006.
Is it lawful for Trump to unilaterally halt penny production?
The legality remains uncertain.
Congress, which has jurisdiction over the US Mint’s operations, would probably need to enact a law for the permanent retirement of the coin. However, some legal experts believe Trump could simply instruct the treasury secretary to cease production.
Legal scholar Laurence H Tribe highlighted that the secretary possesses the power to mint coins in whatever quantities deemed necessary—potentially none for the penny.
“Unlike many actions taken by the new administration [of President Trump] under a wave of executive orders since January 20, this initiative appears to be entirely lawful and fully constitutional,” Tribe stated.
Robert Triest, an economics professor at Northeastern University, remarked that “the process of discontinuing the penny in the US is somewhat ambiguous.”
“It would likely need an act of Congress, but the secretary of the Treasury might have the authority to simply stop minting new pennies,” Triest told Northeastern Global News in a January article, adding that phasing out the penny could raise questions regarding rounding cash transactions and dealing with existing penny collections.