US Mint moves forward with plans to kill the penny

The United States Mint has made its final order of penny blanks and plans to stop producing the coin when those run out, a US Treasury Department official confirmed Thursday. This move comes as the cost of making pennies has increased markedly, by upward of 20 per cent in 2024, according to the Treasury.

By stopping the penny’s production, the Treasury expects an immediate annual savings of US$56 million in reduced material costs, according to the official, who was not authorised to discuss the matter publicly and spoke on condition of anonymity to preview the news.

In February, US President Donald Trump announced that he had ordered his administration to cease production of the 1-cent coin.

“For far too long the United States has minted pennies which literally cost us more than two cents. This is so wasteful!” Trump wrote at that time in a post on his Truth Social site. “I have instructed my Secretary of the US Treasury to stop producing new pennies.”

There are about 114 billion pennies currently in circulation in the United States – that’s US$1.14 billion – but they are greatly underutilised, the Treasury says. The penny was one of the first coins made by the US Mint after its establishment in 1792.

The nation’s treasury secretary has the authority to mint and issue coins “in amounts the secretary decides are necessary to meet the needs of the United States”.

Advocates for ditching the penny cite its high production cost – almost 4 cents per penny now, according to the US Mint – and limited utility. Fans of the penny cite its usefulness in charity drives and relative bargain in production costs compared with the nickel, which costs almost 14 cents to mint.

The Wall Street Journal first reported the news.

Pennies are the most popular coin made by the US Mint, which reported making 3.2 billion of them last year. That’s more than half of all the new coins it made last year.

Congress, which dictates currency specifications such as the size and metal content of coins, could make Trump’s order permanent through law. But past congressional efforts to ditch the penny have failed.

Two bipartisan bills to kill the penny permanently were introduced this year.

Senators Mike Lee, R-Utah, and Jeff Merkley, D-Oregon, introduced the Make Sense Not Cents Act this month. In April, Representatives Lisa McClain, R-Michigan, and Robert Garcia, D-California, along with Senator Cynthia Lummis, R-Wyoming, and Senator Kirsten Gillibrand, D-New York, introduced the Common Cents Act.

Jay Zagorsky, professor or markets, public policy, and law at Boston University, said that while he supports the move to end penny production, Congress must include language in any proposed legislation to require rounding up in pricing, which will eliminate the demand for pennies.

Zagorsky, who recently published a book called The Power of Cash: Why Using Paper Money is Good for You and Society, said otherwise simply ditching the penny will only increase demand for nickels, which are even more expensive, at 14 cents to produce.

“If we suddenly have to produce a lot of nickels – and we lose more money on producing every nickel – eliminating the penny doesn’t make any sense.”

AP