Tags: penny | nickel | Mint | cost

WSJ: Let's Drop the Penny

WSJ: Let's Drop the Penny
(Tim Boyle/Getty Images)

By    |   Wednesday, 10 September 2014 02:43 PM

Many people say the United States should eliminate the penny, which now costs more to produce than it's worth.

Just look at the online comments to a Wall Street Journal article.

Many ask who still uses pennies — inferring that no one does. Some urged dropping the nickel while we're at it. Others said Canada and Australia stopped making pennies and no one has missed them.

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"The penny just doesn't make cents. Yep, that pun is right on the money," comments one reader.

Each one-cent coin costs 1.6 cents to produce, The Journal notes. Rising prices of zinc, the main metal in pennies, has prompted the U.S. Mint to search for a cheaper material. But whatever it might find, making a penny will still cost more than one cent, Tom Jurkowsky, a spokesman for the U.S. Mint, tells The Journal.

The high cost of making pennies regularly prompts proposals to stop their production. Most recently, President Obama called for phasing out the coin in his 2015 budget proposal released this March.

The U.S. mint lost $55 million making pennies last year when it cost 1.8 cents to make each, according to The Journal. Improved production techniques cut costs slightly this year.

Brookings Institution Senior Fellow Henry Aaron argues for dropping the penny as well as the nickel, saying the coins have become they've become nothing but pocket weights.

If we abolished the two coins, we'd simply treat the last digit of every price as zero, he says. Canada stopped minting pennies in 2012. Retailers are not required to offer pennies in change, while noncash transactions can still be denominated in the hundredths of the Canadian dollar.

There's no evidence the decision sparked inflation there, and no reason to think it would here, Aaron says.

The argument that dropping the penny would hurt the poor, who benefit from penny drives, "rings hollow" when Congress is willing to cut food assistance for the poor, he says.

"A billion dollars more in food support, in exchange for whatever charitable largess the penny brings would be a splendid trade.

"Especially risible is the argument of the industries that mine zinc and nickel that dropping the penny and nickel will cost jobs," Aaron adds, noting that U.S. coin production uses only "microscopic proportions" of world zinc and nickel production.

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Many people say the United States should eliminate the penny, which now costs more to produce than it's worth.
penny, nickel, Mint, cost
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2014-43-10
Wednesday, 10 September 2014 02:43 PM
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