In a bold move aimed at fiscal reform, President Trump has directed the U.S. Treasury to cease the production of new pennies, labeling the practice “wasteful.” This announcement came just after the Super Bowl in New Orleans, highlighting the administration’s focus on reducing unnecessary government spending.
In his statement, Trump emphasized the financial burden of minting pennies, arguing that they cost more to produce than their actual value. “For far too long, the United States has minted pennies which literally cost us more than 2 cents,” he stated, advocating for a more efficient budget approach.
The Department of Government Efficiency (DOGE) supports this move, indicating that the penny’s production cost has surpassed its value, costing taxpayers over $179 million in fiscal year 2023. The U.S. Mint reported losses exceeding $85 million from nearly 3.2 billion pennies produced in fiscal year 2024, marking the 19th consecutive year that penny production has exceeded its face value.
The future of the penny has been a contentious issue for decades. Former President Obama has also advocated for its elimination, noting that while the savings may not be substantial, it reflects a need to reevaluate expenditures on rarely used denominations.
However, the authority to eliminate the penny primarily lies with Congress, which oversees the Mint’s operations and coin production. Treasury Secretary Scott Bessent has yet to publicly comment on Trump’s directive. Experts suggest that a legislative act would likely be required to make this change, though some ambiguity remains regarding the Secretary’s potential powers.
Is Congressional Action Required?
Historically, various lawmakers have attempted to suspend or eliminate penny production without success. Reports from the Congressional Research Service indicate that multiple proposals, including studies on coin production costs, have failed to gain traction.
In 2017, legislation proposed by Sen. John McCain aimed to pause penny production for a decade and evaluate the impacts, but such initiatives have not been enacted. The ongoing debate raises important questions about the efficacy of maintaining low-denomination coins in today’s economy.
Arguments For and Against Pennies
Supporters of the penny fear that its elimination could create a “rounding tax” effect, where prices might increase due to rounding up cash transactions. However, some economists argue that rounding could also lead to lower prices in other instances. The debate continues as proponents and critics analyze the implications of maintaining or abolishing the penny.
Critics of the penny highlight the environmental concerns associated with its production, and many consumers have transitioned to cashless transactions, with nearly 87% of payments made electronically in 2024. This shift calls into question the penny’s relevance in a modern economy.
Internationally, several nations have successfully removed low-denomination coins, with countries like Canada phasing out their pennies in favor of more streamlined transactions. Observers suggest that similar reforms in the U.S. could enhance efficiency within its Mint operations.
