In a controversial bid to address purported government inefficiency, former President Donald Trump has proposed ending the production of the iconic penny. This bold move aims to eliminate what he describes as a 'financial drain' on the Treasury. Trump's announcement, made via his Truth Social platform, highlights his plan to cease the creation of new 1-cent coins, citing inefficiencies in cost.
Trump argues that minting pennies, which feature the illustrious profile of President Abraham Lincoln, costs significantly more than their face value. According to the U.S. Mint, this cost has skyrocketed from 1.76 cents in 2020 to 3.69 cents in 2024. In contrast, printing a $1 note requires just 3.2 cents. Trump stated, This is wasteful, and I have instructed the Secretary of Treasury to halt penny production to cut excess from our nation's budget, even if it's a penny at a time.
Economic Considerations and Legality: The financial implications of this cessation are noteworthy. The U.S. Mint reported an $85.3 million loss on penny production in the fiscal year 2024. However, the legality of Trump's directive remains ambiguous. Under the current legal framework, the U.S. Mint operates under the oversight of Congress, which must authorize changes in coin production. Constitutional law experts, including Laurence Tribe from Harvard Law School, suggest that Trump's Treasury Secretary may have the authority to proceed, but Congressional input is typically needed.
Opposition Perspectives: The plan has faced significant opposition. Mark Weller, executive director of Americans for Common Cents, argues that eliminating the penny could adversely affect the economy. Weller warns that ceasing penny production might force the Mint to increase nickel production instead, which costs nearly 14 cents per coin—more than its face value. Without the penny, we could see a rise in production for nickels, elevating overall losses, he noted, emphasizing potential negative impacts on consumer pricing and the economy at large.
Another compelling point raised by Weller is the potential impact on consumers, particularly those relying on cash transactions. Despite the rise of digital payments, cash remains a vital tool for many, including the underbanked. Weller posits that this move could lead to price rounding, generally not favoring consumers.
Historical Insight: From a historical viewpoint, Caroline Turco of the Money Museum in Colorado Springs explains that technically, the U.S. has never had a 'penny'—a term borrowed from Britain. Since 1793, the U.S. has minted 1-cent pieces, originating as large as a quarter. Lincoln's visage was added to the coin in 1909 to commemorate his legacy. Turco notes that eliminating the penny is not unprecedented, as other nations, like Canada, have phased it out for similar cost-related reasons.
Cultural and Numismatic Value: Culturally, the penny holds a significant place in American folklore with sayings like a penny saved is a penny earned. If the penny becomes obsolete, its rarity may possibly enhance its value among collectors. Turco concludes, while penny production might cease, its legacy will endure through language and collections, retaining its nostalgic charm.
Ultimately, whether cutting penny production will be a fiscally sound move or financially counterproductive remains to be seen, as the nation assesses economic impacts and legislative requirements.