Here’s a penny for your thoughts: last fiscal year, it cost 1.50 cents for the U.S. Mint to produce and manufacture each penny. That loss costs taxpayers several billion dollars each year. A new bill in Congress would end the penny once and for all.
That aforementioned 1.50 cents figure from last year was up from 1.43 cents the year before. In fact, it has cost more than one cent to manufacture a penny every year for at least the past decade.
That might sound funny, but it’s actually more serious than it sounds. In fiscal year 2015, the Mint produced more than 9 billion pennies. Given the amount it cost to produce each penny at the time, that was a net loss to taxpayers of approximately 3.9 billion dollars. Combine that with the fact that penny has cost more than a penny to produce for years now, and that’s a likely cumulative loss to taxpayers of tens of billions of dollars.
What the bill does
S. 759, the Currency Optimization, Innovation, and National Savings (COINS) Act, would do several things, but has attracted the most attention for its proposal to discontinue penny production. In addition, further savings would come from changing the dollar bill to a coin and reducing the cost of nickel production, since like the penny it also costs more than its face value to produce each nickel, currently at 6.32 cents each. (The rest of the U.S. currency, such as the dime and quarter, generate more than the coin’s face value.)
If the legislation introduced by Sen. John McCain (R-AZ) passes, consumers would just use the billions of pennies already in circulation, but the U.S. Mint would not produce any further coins.
What supporters say
Supporters argue that the penny has outlived its usefulness and costs taxpayers too much money given its production costs.
We’ve done this before when coins were no longer worth the effort. The U.S. Mint discontinued the half penny in 1857, due to its lack of significant monetary value at the time. Yet adjusted for inflation, the half penny then would be worth about 14 cents today. That’s the equivalent of getting rid of not just the modern penny, but also the modern nickel and dime for being virtually worthless.
A number of other countries have discontinued their lowest denomination coin in the past few years, such as Canada in 2013. Doing so did indeed save Canada some money, about $11 million taxpayer dollars per year.
“With our country facing $20 trillion in debt, Congress must act to protect the American taxpayer,” McCain said in a press release. “By reforming and modernizing America’s outdated currency system, this commonsense bill would bring about billions in savings without raising taxes.”
Although the Congressional Budget Office has not yet scored this particular bill, McCain’s press release claims the legislation could produce “up to” $16 billion in taxpayer savings.
What opponents say
Opponents are also likely influenced by campaign contributions from those who benefit from the status quo. A Tennessee-based company called Jarden Zinc Products has been the country’s sole supplier of penny blanks since 1982. They spent $1.94 million in lobbying Congress during the past decade.
Such a move could also prove unpopular with the public. A 2014 Huffington Post Politics poll found that opposition to eliminating the penny outweighed support by 51 versus 34 percent.
Although the government and taxpayers lost money on each penny and nickel (which costs more than five cents to produce), they actually earn money on every dime and quarter, which cost less than 10 and 25 cents respectively to produce. Opponents note that the overall balance is actually a net financial gain on coin production, so if it isn’t really broken, no need to fix it.
Odds of passage
In the previous presidential administration, both President Obama and his Treasury Secretary Jack Lew expressed openness to discontinuing the penny. A memo from Lew supported the move.
“This is not going to be a huge savings for government. But anytime we’re spending more money on something that people don’t actually use, that’s an example of something we should probably change,” Obama said. “One of the things that you see chronically in government is it’s very hard to get rid of things that don’t work so that we can then invest in the things that do.”
Yet even with top government officials on board, it still didn’t happen. Odds of passage might be difficult this time around too. The bill has so far attracted one cosponsor, Sen. Michael Enzi (R-WY). It has yet to receive a vote in the Senate Banking, Housing, and Urban Affairs Committee.
However, previous versions of the bill introduced in prior Congresses by former Sen. Tom Harkin (D-IA) and cosponsored by McCain did not even include the penny discontinuation provision. In that sense, momentum may be gaining. The last bill GovTrack Insider could find that would discontinue penny production was all the way back in 2006.