According to the U.S. Mint, producing a penny costs the government nearly four times more to make than its face value – a fact that has many people, including President Donald Trump, questioning the wisdom of minting the coin.
Trump this week joined plenty of penny opponents when he announced he told federal officials to stop minting the copper-coated zinc coins festooned with the visage of Abraham Lincoln.
“For far too long, the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!” Trump wrote in a Feb. 9 social media post. “I have instructed my Secretary of the U.S. Treasury to stop producing new pennies.”
The penny’s fate remains uncertain. No executive order has been published regarding the president’s penny directive, and the U.S. Constitution grants Congress exclusive authority to make money. Congress created the U.S. Federal Reserve to oversee monetary policy.
“It’s legally complicated. It’s unclear whether the president, Congress or the Secretary of Treasury has the power to do it,” said Lana Swartz, associate professor of media studies at UVA, a Shannon Mid-Career Fellow and an expert on money in society.
“Producing money is kind of intricate. The Federal Reserve forecasts the amount of currency needed and buys coins from the U.S. Mint at face value and then distributes those coins to financial institutions. Coins are an asset on the Federal Reserve balance sheet while it is holding them,” she said.
Trump’s voice is the most recent in a chorus calling for the penny’s demise. The refrain began in 1989 with legislation to eliminate the 1-cent piece and require all prices to be rounded to the nearest nickel. The proposed law failed. Despite bipartisan support, similar efforts in 2001, 2006 and 2017, including a proposal by the late U.S. Sen. John McCain that included a 10-year study period, had similar fates.
Lana Swartz, associate professor of media studies and expert on money in society, says the minting, printing and circulation of money in the U.S. is intricate and that makes it more difficult to drop the penny. (Contributed photo)
But the coin’s days are likely numbered. Remember that penny you offered for your boss’s thoughts? Well, it costs about 3.7 cents to make, according to the U.S. Mint. The only other U.S. coin that costs more to create than its face value is the nickel; its production costs almost 14 cents per coin.
Other countries have dropped their lesser coins for similar reasons. Canada cut its penny in 2012 and revamped its monetary system, developing a user-friendly digital payment system accessible to most Canadians, including the legally blind. The system reduces cash use in daily transactions.
The Treasury Department estimates cash is used in about 18% of financial transactions in the U.S. But most U.S. digital pay systems, like PayPal and Venmo, are privately owned and charge fees or a percentage of each transaction.
