The US Treasury is phasing out production of the penny and will soon stop putting new one-cent coins into circulation, the department said in a statement Thursday. The news of the decision was first reported by the Wall Street Journal Thursday. A Treasury spokesperson said the government made its final order of penny blanks this month, and the United States Mint will continue to manufacture pennies only as long as an inventory of penny blanks exists. Consumers with pennies will still be able to use them for purchases. But without new pennies moving into circulation, businesses that complete cash transactions will have to start rounding up or down to the nearest nickel. The move is not a surprise. The production of a penny costs more than the value of the coin. President Donald Trump said in February that he ordered the US Mint to stop making pennies, citing the cost. “For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! I have instructed my Secretary of the US Treasury to stop producing new pennies. Let’s rip the waste out of our great nations budget, even if it’s a penny at a time,” Trump said in a post to social media as he returned to Washington from the Super Bowl in February. Trump actually undersold the cost argument — pennies cost more than three cents each to produce. But the cost of a penny might be a smaller problem than the alternative. That’s because the Mint actually loses even more money on each nickel it produces. Each nickel costs 13.8 cents, with 11 cents of production costs and 2.8 cents of administrative and distribution costs. These figures are for the government’s most recent fiscal year, which ended in September. People have been talking about getting rid of the penny for years. During the most recent fiscal year, the Mint tried to cut those losses by making far fewer nickels — only 202 million, down 86% from the 1.4 billion nickels it minted in each of the previous two years. That’s also far fewer than the 3.2 billon pennies it made in 2024, the 4.1 billion it made in 2023 and 5.4 billion it made in 2022. The Treasury statement did not address its plans for nickel production. It did estimate an immediate savings to taxpayers of $56 million from the halt of penny production. “Given the cost savings to the taxpayer, this is just another example of our administration cutting waste for the American taxpayer and making the government more efficient for the American people,” it said. Even if the Mint has to make only 850,000 additional nickels in 2025 to meet demand, that would wipe out any savings from eliminating the penny. If the Mint goes back up to making 1.4 million nickels a year, that would cost $78 million more than any savings from the pennies it stopped producing. The Mint would likely have to make more nickels than that — probably in the range of 2 million to 2.5 million a year if it stops making pennies permanently, based on the track record in other countries that dropped their lowest valued currency, said Mark Weller, executive director of the Americans for Common Cents, a trade group funded primarily by Artazn, the company that has the contract to provide the blanks used to make pennies. “In most countries, the lowest domination coin is the most minted coin,” he said. But the idea of dropping the penny is supported by others, including some merchants. The National Association of Convenience Stores has agreed in the past with the idea of getting rid of the penny to speed transaction time, even if only by a second or two for each customer paying with cash. “Convenience stores sell a lot of products, but what they really sell is speed of service,” Jeff Lenard, a spokesman for the group, told CNN in February. He couldn’t say if nickel usage would increase, but he did say that without the penny cash transactions would be rounded to the nearest nickel. And the United States wouldn’t be the first to dump its least valuable coin. Canada stopped minting their pennies in 2012 and stopped using them entirely in 2013. One reason that the US government has to make so many pennies every year is because a large percentage of them don’t remain in circulation. They are stashed in penny jars or junk drawers at home, or they fall on the ground and people don’t even bother to pick them up. Many people leave behind the pennies they get as change in leave-a-coin-take-a-coin dishes on counters of many retailers. Those dishes are increasingly holding nickels as well, which also have few uses. “When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful,” said Gregory Mankiw, a Harvard economics professor and former chairman of the President’s Council of Economic Advisers under President George W. Bush.
The Treasury unveils its plan to kill the penny
TruthLens AI Suggested Headline:
"US Treasury Announces Phase-Out of Penny Production"
CNN
7.6
TruthLens AI Summary
The US Treasury has announced its decision to phase out the production of the penny, marking a significant change in the nation's currency system. This decision was confirmed in a statement released by the department, indicating that the final order for penny blanks was placed this month. The United States Mint will continue to manufacture pennies only until the existing inventory of blanks is depleted. Although consumers will still be able to use pennies for their purchases, businesses that handle cash transactions will have to adapt by rounding totals to the nearest nickel. This move comes as no surprise, given that the cost of producing a penny exceeds its actual value, with each penny costing more than three cents to mint. President Donald Trump previously highlighted this issue, emphasizing the wastefulness of minting coins that cost more to produce than they are worth. The Treasury estimates that halting penny production will save taxpayers approximately $56 million, showcasing the administration's ongoing efforts to reduce government waste and enhance efficiency for the American public.
Despite the anticipated savings, the transition away from the penny raises questions about the future of nickel production. The Mint has already experienced significant losses on the nickel, which costs about 13.8 cents to produce. If the Mint is required to increase nickel production to meet demand after discontinuing the penny, it could negate any financial benefits gained from eliminating the penny. Observers note that other countries that have eliminated their lowest denomination coins often see an increase in the production of the next lowest denomination. Some merchants, particularly those in the convenience store sector, support the removal of the penny as it could streamline transactions, albeit by just a few seconds. Furthermore, the US is not alone in this shift; Canada ceased minting pennies in 2012 and fully removed them from circulation by 2013. The prevalence of pennies being hoarded or left behind as change indicates that their utility has diminished, leading to a broader debate about the relevance of low-denomination coins in modern transactions.
TruthLens AI Analysis
The decision by the US Treasury to phase out the penny is a significant move that reflects ongoing discussions about the efficiency and practicality of currency in modern society. The announcement highlights economic considerations, particularly the cost of producing pennies, which exceeds their face value.
Economic Implications
The article emphasizes the financial inefficiency associated with the penny. The production cost of a penny is over three cents, making it a poor investment for the government. This raises questions about the overall efficiency of minting coins that are not widely used in transactions. The decision could lead to changes in consumer behavior, particularly regarding cash transactions, as businesses will need to adjust their pricing strategies when rounding amounts to the nearest nickel.
Public Reaction
Historically, there has been a mixed sentiment regarding the penny. While some consumers may welcome the elimination due to the inconvenience of carrying small denominations, others may view it as a loss of tradition. The article suggests that former President Trump's remarks about the penny's inefficiency resonate with those who favor optimizing government spending.
Hidden Agendas
There may be underlying motivations for the timing of this announcement. The focus on eliminating the penny could serve as a distraction from other economic issues or policy changes that are less favorable. By drawing attention to a seemingly small change, the government might be attempting to shift public discourse away from more pressing economic concerns.
Impact on Society
The decision to phase out the penny could have broader societal implications. It may lead to changes in how people perceive cash transactions and could accelerate the shift towards digital payments. As businesses adapt their cash-handling practices, this could also influence consumer spending habits.
Market Reactions
This announcement could have implications for businesses that rely heavily on cash transactions, potentially affecting their operations. While the penny itself may not directly impact stock prices, companies involved in cash handling or payment processing might see shifts in their operations.
Broader Context
In the context of current global economic challenges, the decision to eliminate the penny could reflect a broader trend towards modernization and efficiency in financial systems. This aligns with ongoing discussions about the future of currency, including the rise of digital currencies.
The use of artificial intelligence in writing this article seems plausible, particularly in how the information is structured and presented. AI models might have been utilized to analyze data regarding coin production costs and synthesize it into a coherent narrative. The language is straightforward and factual, which suggests a systematic approach to conveying the message.
This article appears to have a moderate level of manipulative intent. While the discussion around cost efficiency is valid, the framing could lead readers to overlook the broader implications of the decision. The language used focuses on economic benefits while downplaying potential drawbacks, such as the loss of cash transactions for low-income consumers who rely on coins.
Overall, the reliability of the information presented is supported by factual data regarding production costs and government statements, but the emphasis on cost-saving measures might overshadow other important considerations.