It costs the US Treasury 2.41 cents to make a penny, and President Barack Obama believes that minting coins that cost more to make than they are worth is a waste of taxpayer money.
Obama’s proposal for the demise of the penny came on Friday, in a Google+ Hangout chat.
“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,” he said.
As with most issues in the US, the future of the penny is being influenced by lobbyists, specifically, Jarden Zinc Products, which supplies all the zinc used to make American pennies. The company has successfully blocked the elimination of pennies in the US for 24 years, lobbying against the Price Rounding Act of 1989, the Legal Tender Modernization Act of 2001 and the Currency Overhaul for an Industrious Nation Act of 2006.
Changing the composition of pennies has also been suggested as a way to reduce production costs. Ohio Rep. Steve Strivers introduced a bill in 2011 called the Cents and Sensibility Act, which would have changed zinc pennies into steel and copper.
In an effort to protect their monopoly on penny-making materials, Jarden Zinc Products paid lobbyist Mark Weller $340,000 to block the measure, according to a Center for Responsive Politics report from WRCBtv.
However in 2013, pressure is building to cut spending and government waste, and eliminating the penny is one of more painless ways to do this. It does not involve cutting benefits or services to the middle-class or poor, and reaches all segments of the economy equally.
Other countries have seen the wisdom in getting rid of penny production. The most recent was Canada, which announced that their government would stop minting pennies last year. They have now joined Sweden, the Philippines, Australia, Brazil, Mexico, Hong Kong and a whole host of other nations that have long since used simple math to make a smart cost-saving decision.
If the penny is eliminated, consumer prices would be rounded-up to the nearest nickel, which could add up to more money out of their pockets. But the trade-off still has advantages, not the least of which is fewer coins of little value weighing down pockets and wallets.
If President Obama gets his way, the US will save about $120 million a year. That may not sound like a lot in an economy as massive as the US, but as the saying goes, every penny counts.
Editor's Note: This report includes orignal research by the author.
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