Estimated read time: 2-3 minutes
- Senators Mike Lee and Jeff Merkley propose eliminating the penny to save millions.
- The U.S. Mint reports penny production costs exceed their value, costing $117 million.
- Other countries, like Canada, have eliminated low-value coins due to similar cost issues.
WASHINGTON — Sen. Mike Lee, R-Utah, and Sen. Jeff Merkley, D-Ore., have a plan to save American taxpayers millions of dollars, titled the "Make Sense Not Cents Act."
The U.S. Mint's 2024 Annual Report stated the unit cost for pennies rose by 20% in 2024, and for the 19th year in a row, its unit cost remained above its face value, at 3.69 cents.
Penny production last year came to a gross cost of $117 million, per the report.
"Minting pennies costs the American taxpayer millions every year — nearly four times more than the pennies are worth," Lee said in the bill's press release. "No private business would produce something at a 4x loss. It's time to stop wasting Americans' hard-earned tax dollars making overpriced pennies."
U.S. to join other countries that have dropped their lowest currency?
In the 1990s, Australia and New Zealand stopped 1- and 2-cent penny production. Then in 2006, New Zealand stopped producing its 5-cent coin as well, per Nasdaq.
Canada followed suit in 2012, removing 6 billion pennies from circulation over three years, GovMint reported. The decision was made due to "rising production costs exceeding the face value of the coin and a decline in the penny's purchasing power over time," the site reported.
When the Bahamas stopped producing its lowest valued coin in 2020, Lisa Cook, a former White House aide during the Obama administration, told the BBC, "I think the public in rich, industrialized countries is becoming less and less wedded to coins, generally."
"After Canada stopped minting the penny in 2012, I think policymakers in other industrialized countries will be more willing to eliminate lower-value coins," she added.
Could nickels be on the chopping block as well?
In the same 2024 annual report, the U.S. Mint reported that the unit cost for nickels has also remained above face value for 19 consecutive years, at 13.78 cents.
The total amount spent on nickel production in 2024 was about $27.8 million.
While Lee's bipartisan bill does not mention nixing nickels, The New York Times entertained the idea.
"Having just two coins could hasten a trend away from physical currency that is already underway," the Times wrote.
The Federal Reserve reported that in 2023, the average American made only seven cash payments, and the number has been consistent since 2021. Further, between 2016 and 2023, cash payments decreased from 31% of all transactions to 16%.
