Trump orders US Mint to Cease Production of Pennies, Saying at 2 cents each "It Doesn't Make Sense."

President Trump said on Sunday night that he had ordered the Treasury secretary to stop producing new pennies, a move that he said would help reduce unnecessary government spending.

"Let's rip the waste out of our great nations budget, even if it's a penny at a time," he said in a post on Truth Social. He characterized the production of pennies, which "literally cost us more than 2 cents" each, as wasteful.

The United States Mint has not officially announced plans to stop producing pennies as of the latest available information. However, there has been significant discussion and debate on this topic, reflected in various sources and public sentiment:

Production Costs vs. Face Value: It's widely noted that it costs more to produce a penny than its face value. According to information from 2023, each penny cost over 3 cents to make, leading to a substantial loss for taxpayers. Posts on X and articles from sources like The Balance Money highlight that the Mint produced billions of pennies annually, costing millions in negative seigniorage (the difference between the cost of minting a coin and its face value).

Public and Economic Arguments:

Trump orders US Mint to Cease Production of Pennies, Saying at 2 cents each "It Doesn't Make Sense."

For Elimination:

Economic Efficiency: Economists argue that eliminating the penny would save money due to the cost of production being higher than the penny's value. There's also the argument of efficiency in transactions; handling pennies adds time to cash transactions, which could be reduced without them.

Environmental Impact: The production of pennies has environmental costs due to the mining and processing of metals.

Precedents: Other countries like Canada, Australia, and New Zealand have eliminated their lowest denomination coins without significant negative impacts on their economies.

Against Elimination:

Nostalgia and Tradition: Some argue that pennies have cultural significance, with many Americans feeling an emotional attachment to them. Surveys have shown a portion of the population would be disappointed if the penny were discontinued.

Rounding Concerns: There's a concern about a potential "rounding tax" where businesses might round prices up, potentially increasing consumer costs, although some studies suggest this might not significantly affect overall prices.

Charity and Small Transactions: Pennies can accumulate for charities or small, everyday donations.

Potential Implementation: If the U.S. were to stop producing pennies, the process would likely involve:

Congressional approval since the decision to mint coins rests with Congress.

A system of rounding cash transactions to the nearest nickel, similar to practices adopted in Canada post-penny.

Handling existing pennies as legal tender until they are naturally phased out of circulation.

Is it a Good Idea?:

Economic Perspective: From an economic efficiency standpoint, stopping penny production could be beneficial, reducing waste and cost to taxpayers.

Public Reaction: Public acceptance might be mixed due to the cultural attachment to pennies. However, the trend towards digital payments might mitigate this resistance over time.

Practicality: The logistics of removing pennies from circulation would need careful planning to avoid inconvenience, like what was seen in Canada where pennies remained legal tender but were gradually removed from practical use.

In conclusion, while there's no official decision yet, the arguments for ceasing penny production are strong from an economic perspective, suggesting it could be a good idea if implemented thoughtfully. However, cultural and practical considerations also play significant roles in this debate.