4 months ago
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(NewsNation) — President Donald Trump says helium has directed the U.S. Treasury to halt making caller pennies, which are worthy little than they outgo to produce.
“For acold excessively agelong the United States has minted pennies which virtually outgo america much than 2 cents. This is truthful wasteful!” Trump wrote successful a Truth Social post connected Sunday. “I person instructed my Secretary of the US Treasury to halt producing caller pennies.”
He added: "Let's rip the discarded retired of our large nations budget, adjacent if it's a penny astatine a time."
The U.S. Mint reported losing implicit $85 million connected the astir 3.2 cardinal pennies it produced successful fiscal twelvemonth 2024.
Trump's announcement comes soon aft Elon Musk's Department of Government Efficiency (DOGE) squad highlighted the outgo of making pennies.
Here's however overmuch pennies are costing taxpayers and what eliminating the one-cent coin would take.
How overmuch bash pennies and nickels cost?
The main statement for getting escaped of pennies is astir redeeming the U.S. immoderate money.
Every penny outgo $0.0369 successful 2024, up 20% from the twelvemonth before, according to U.S. Mint's yearly report.
That means the portion outgo of producing and distributing a penny is much than triple its look value.
Nickels besides outgo much to nutrient than they're worth. Each of the $0.05 coins outgo astir $0.14 to make.
As precocious arsenic 2022, the nickel outgo astir $0.10, but rising earthy materials costs person made them much costly to produce.
The Mint mislaid $17.7 cardinal connected nickels successful 2024, meaning the 2 coins unneurotic outgo taxpayers implicit $100 cardinal past year.
In fiscal twelvemonth 2023, the losses were adjacent higher, astir $180 cardinal betwixt pennies and nickels.
Pennies were made of copper earlier 1962 but are present mostly made of zinc with a bladed copper plating.
Can Trump discontinue the penny?
It's not wholly wide if Trump tin discontinue the penny connected his own.
"Congress authorizes each coin and astir medals that the U.S. Mint manufactures and oversees the Mint’s operations nether its Public Enterprise Fund (PEF)," according to the U.S. Mint's website.
Still, the president whitethorn beryllium capable to halt the accumulation of caller pennies.
"The process of discontinuing the penny successful the U.S. is simply a small unclear. It would apt necessitate an enactment of Congress, but the Secretary of the Treasury mightiness beryllium capable to simply halt the minting of caller pennies," Robert K. Triest, an economics prof astatine Northeastern University, said past month.
Back successful 1857, it was Congress that discontinued the unpopular half-cent coin and made the cent smaller to chopped backmost connected the magnitude of copper needed.
Treasury Secretary Scott Bessent has yet to remark publically connected the president's directive.
Why does the U.S. inactive marque pennies?
Countries similar Brazil, Canada, Norway and New Zealand person each stopped producing low-denomination coins, truthful wherefore is the U.S. inactive making pennies?
"The Mint’s authoritative crushed for minting pennies is that the Federal Reserve orders them," The New York Times Magazine's Caity Weaver wrote successful a 2024 story calling for the extremity of the penny.
Weaver added: "Specifically, the Federal Reserve 'buys' coins from the Mint astatine look worth and stores them successful bags each implicit the United States for organisation to banks."
If that doesn't dependable similar a precise bully reason, you're not alone. Surveys suggest most Americans connected some sides of the aisle deliberation the authorities should halt producing pennies.
In 2013, then-President Barack Obama called the penny a "good metaphor" for immoderate of the larger problems facing the U.S. authorities but acknowledged that nostalgia whitethorn explicate the penny's lasting power.
"It's 1 of those things wherever I deliberation radical get attached emotionally to the mode things person been," Obama said. "We retrieve our piggy banks and counting up each our pennies and past taking them successful and getting a dollar measure oregon a mates of dollars from them, and possibly that's the crushed radical haven't gotten astir to it."
Is determination a downside to getting escaped of pennies?
Proponents of the penny pass that ending accumulation could thrust up request for nickels, which are adjacent much costly to produce.
"If penny accumulation were eliminated, nickel accumulation would apt double, compounding the Mint’s losses," according to Americans for Common Cents, an advocacy group.
Instead, the radical argues the Mint should reexamine its overhead costs and absorption connected reducing the outgo of producing nickels.
Decommissioning the penny could besides alteration the mode commodities are priced since prices ending successful 99 cents are truthful common. That could beryllium bully oregon atrocious for consumers.
"The point that erstwhile outgo $2.99 mightiness past outgo $2.95," said William Dickens, who taught economical and nationalist argumentation astatine Northeastern University.
On the different hand: “Businesses mightiness circular up much often than down, starring to a flimsy inflationary effect,” David Smith, an economics prof astatine Pepperdine University’s Graziadio Business School, told CNBC.
When Canada eliminated the penny, currency transactions were rounded to the nearest 5 cents based connected the full magnitude of the transaction, not connected each item.
A 2017 paper recovered that penny-rounding successful Canada imposed a taxation of astir $3.27 cardinal connected Canadian consumers astatine market stores. For a emblematic store, the further rounding gross amounted to an estimated $157 other each twelvemonth — suggesting a reasonably minimal interaction connected shoppers.
Others successful favour of keeping the penny point out that a alleged "rounding tax" would disproportionately impact the mediocre since they're much apt to usage currency than the rich.
Would pennies go worthless?
If you've been hoarding pennies, don't interest — they're improbable to go worthless overnight. Halting the accumulation of caller pennies and removing them from the strategy are not the aforesaid thing.
Ajay Patel, a concern prof astatine Wake Forest University School of Business, told CNBC the existent elimination of pennies is decades into the future.
According to Patel, radical would beryllium capable to proceed utilizing pennies until they are dilatory reabsorbed into the banking strategy and yet melted down to recycle their zinc and copper.
In fact, pennies could go much invaluable implicit time.
“Pennies would go much scarce implicit clip and yet summation successful value. In the adjacent term, they mightiness go useless, depending connected however the Treasury treats them. I would deliberation that would person to beryllium successful phases truthful radical could person them to different denominations, frankincense removing them from the system," Gates Little, the CEO of Alabama-based Southern Bank, told CNBC.
As of close now, determination are an estimated 240 cardinal pennies lying astir the U.S., according to The New York Times Magazine. That's implicit 700 pennies for each man, pistillate and kid successful the country.
The Associated Press contributed to this report.
