President Donald Trump has directed the U.S. Treasury Department to cease minting new pennies, highlighting the ongoing financial burden of producing the small denomination coin. In a post shared on his Truth Social platform, Trump referred to the penny as a "waste of taxpayer money," adding that each penny costs more than two cents to produce.
The U.S. Mint reported a loss of $85.3 million during the last fiscal year due to penny production, with each coin costing 3.69 cents to manufacture. The government also incurs similar losses on other coins, like the nickel, which costs 13.78 cents to mint.
Can Trump Legally Stop Penny Production?
The legality of President Trump’s order remains unclear. The U.S. Mint has stated that only Congress has the authority to authorize changes to coinage, including discontinuing production of certain coins. Some experts, however, suggest that the Treasury secretary might have the discretion to pause minting without congressional approval.
Robert K. Triest, an economics professor at Northeastern University, noted that the process surrounding coinage changes is somewhat ambiguous, but he believes the Treasury could halt penny production without violating the law.
Attempts to Eliminate the Penny
The penny has long been a subject of debate in Congress. Over the years, several bills have been introduced to eliminate the coin, either by suspending its production temporarily or by removing it entirely from circulation. None of these proposals have passed into law.
Global Trends in Coin Elimination
The U.S. is not alone in considering the elimination of its smallest coin. Canada discontinued penny production in 2012, citing the high costs associated with manufacturing the coin. Cash transactions in Canada are now rounded to the nearest nickel. Other countries, such as Australia, Sweden, and New Zealand, have also phased out their smallest coins in favor of more efficient monetary systems.
Economists agree that removing the penny from circulation would likely have a minimal impact on the U.S. economy, as the coin is rarely used in everyday transactions and often ends up discarded or stored in jars.
Opposition to Penny Elimination
Despite these potential savings, the proposal to eliminate the penny has sparked strong opposition. The group Americans for Common Cents, which advocates for the continued production of the penny, argues that the costs of eliminating the coin could offset any savings. They claim that the overhead costs at the U.S. Mint would remain, potentially raising the per-unit production costs of other coins like the nickel.
Opponents also worry about the potential for price rounding, which could lead to small increases in consumer prices. With many retail prices traditionally ending in 99 cents, critics argue that businesses would likely round prices up, ultimately resulting in a hidden tax for consumers.
Another concern is that eliminating the penny could lead to a greater reliance on nickels, which are even more expensive to produce than pennies.
What Happens Next?
It remains uncertain whether the Treasury Department will follow through with Trump’s directive to stop penny production without congressional approval. The move could become part of a broader effort by the administration to reduce government spending. Regardless of the outcome, the debate over the penny is likely to continue, with many watching closely to see whether the U.S. will join the growing list of countries that have phased out their smallest-denomination coins.
