Background and Relevance
The United States government is gradually removing the penny from circulation, a move that has been supported by both Democrats and Republicans. This decision comes after two centuries of penny usage, with the coin being more prone to loss or misplacement within American households. Both former President Donald Trump and President Barack Obama have criticized its use, with Obama requesting the Treasury to cease penny production in February.
Legislative Efforts and Cost Savings
The U.S. Congress has been involved in legislative initiatives aiming to halt penny production. The United States Mint, responsible for producing Treasury coins, anticipates annual savings of $56 million by discontinuing penny production. According to The Wall Street Journal (WSJ), producing a single penny costs 4 cents due to its composition of zinc and copper, rather than being made entirely of copper.
Impact on Businesses and Consumers
Businesses will need to round their charges to the nearest 5 cents for consumers, as penny production ceases. Although cash transactions will continue, businesses must adjust their pricing, and state and local governments should guide retailers through this transition.
Penny’s Cultural Significance
The penny holds cultural significance in the U.S., with the saying “A penny saved is a penny earned” deeply ingrained in American culture. The design has evolved over the centuries, transitioning from a depiction of a woman with wind-blown hair to the current smaller size, as it is no longer made of pure copper but a zinc-copper alloy.
Penny’s Future and Current Usage
The phase-out of the penny from the American economy depends on Congressional decisions regarding its production, size, composition, elimination, or suppression. The government lost over $85 million last year on 300 million pennies produced. Americans discard approximately $68 million worth of coins annually, often found in plastic containers or jars, with at least 60% of circulating coins kept in jars.
Key Questions and Answers
- What is the main reason for phasing out the penny? The penny’s tendency to be lost or misplaced, along with its high production cost compared to its face value, has led to the decision to phase it out.
- How will businesses be affected by the penny’s removal? Businesses must round their charges to the nearest 5 cents for consumers and adjust their pricing accordingly.
- What are the financial implications of discontinuing penny production? The U.S. Treasury anticipates annual savings of $56 million by discontinuing penny production, as it costs 4 cents to produce a single penny.
- What is the cultural significance of the penny in the United States? The penny holds deep cultural roots, with sayings like “A penny saved is a penny earned” reflecting its importance in American society.
