Headline: Trump Proposes Ending Penny Production Due to High Costs
Trump Directs Treasury Department to Halt Production of Perceived Wasteful Pennies
President Trump recently expressed his intention to halt the production of pennies, citing their exorbitant cost of production compared to their face value. In a controversial move, Trump announced on his Truth Social platform that the U.S. has been minting pennies for far too long that cost more than 2 cents each.
Key Points
In his declarative post, Trump criticized the wasteful nature of producing pennies, even if it's just a penny at a time. He instructed the Secretary of the U.S. Treasury to stop their production, hinting at cutting down waste within the country's budget.
This decision comes shortly after the Elon Musk-led Department of Government Efficiency drew attention to the high cost of manufacturing pennies.
However, the legality of this unilateral action is unclear. It may require congressional approval, similar to the discontinuation of the half cent coin in 1857.
Cost Breakdown
In its 2024 annual report, the U.S. Mint revealed that each penny costs 3.69 cents to manufacture, more than three times its face value. With a shocking annual loss of $85.3 million in the production of pennies in financial year 2024, the one-cent coin accounted for 54% of the total 5.87 billion coins produced by the mint.
Similarly, the nickel or five-cent coin also suffers from excess production costs, with each nickel costing 13.78 cents to manufacture in FY 2024, resulting in a total loss of $17.7 million.
Potential Responses
Congress's reaction to Trump's decision to suspend penny minting is under scrutiny. Should the measure garner bipartisan support, legislators may need to pass legislation on cash transactions not divisible by the next lowest denomination – the five-cent coin.
Critic's Take
Americans for Common Cents, a pro-penny lobby group, responded to Elon Musk's post against pennies, asserting that while the penny's production cost exceeds its face value, the real culprit is the nickel, which costs near 14 cents per unit to produce. If the U.S. Mint were to eliminate the penny, more nickels would be needed, increasing losses associated with nickel production.
Further Insights
Environmental Impact
The widespread production of pennies and nickels contributes to carbon dioxide emissions, pollutants, and energy use, making it an environmentally unfriendly practice.
Alternative Solutions
Some experts recommend rounding down cash transactions to the nearest nickel, reducing the need for pennies and possibly lowering production costs. However, this approach may lead to inflation perceptions and consumer price discrepancies.
International Precedents
Several countries, including Canada and Australia, have abolished their one-cent and two-cent coins due to similar cost concerns.
A reevaluation of penny production in the U.S. confronts significant economic, environmental, and social considerations. While saving the government money may be a compelling reason, the impact on low-income households, charitable organizations, and inflation perceptions requires careful contemplation.
The U.S. Treasury Secretary was urged by President Trump, following his proposal to halt penny production, to implement this change in an effort to reduce waste within the national budget. Despite criticism from the Americans for Common Cents, a pro-penny lobby group, Trump also suggested Trump pennies as a potential alternative, which are one cent coins bearing his image.