The US Treasury has been ordered by the former President Donald Trump to stop producing penny coins, due to the fact that the manufacturing costs have consistently exceeded their face value over the past 20 years.
Trump, in a Truth Social posting on Sunday evening, called the continuing production of one-cent coins “wasteful”, and ordered the Treasury Department to cease producing them.
This decision is a result of discussions about government inefficiencies, and it aligns itself with other cost-cutting initiatives.
The question of whether Trump is authorized to implement this directive in the absence of congressional approval remains unanswered, and raises concerns about the necessary legislative process for such an action.
US Mint loses $85.3M by 2024
Cost of producing a penny is consistently higher than its value.
The US Mint 2024 Annual Report states that each penny cost 3.69 cents, which is more than three-and-a-half times the value of a penny.
The loss from the penny production was $85.3 in fiscal year 2024.
This report revealed pennies made up 54% of US coins during this period. It highlights the magnitude of the problem.
The financial burden goes beyond the penny. Manufacturing the nickel five-cent coins costs as much or more than their face value.
The Mint lost $17,7 million in FY2024 because each nickel was 13.78 cents.
The figures that have been released spark debates on the need for low-value coins and their inefficiency to the budget.
These denominations are becoming increasingly difficult to sustain, according to the Mint.
Congress Approval Required
The Treasury has been ordered by Trump to cease production of pennies. This raises legal, logistical and other challenges.
In the past, any change to US currency has required legislation, as was the case with the discontinuation in 1857 of the half cent coin. Treasury could face difficulty halting production of pennies unilaterally without Congress’ intervention.
Prior legislative proposals addressed the rounding of cash transactions up to five cents and eliminating the requirement for pennies.
If Trump’s directive is successful, legislators may have to adopt similar rounding rules to prevent transactional inconsistencies when making cash purchases.
Others warn against sudden changes which could confuse customers.
The future of pennys
It is nothing new to push for the elimination of pennies. Financial analysts argue that smaller-denomination coinage is no longer useful, particularly with the growth of card-based payment and digital transactions.
Canada for instance, has eliminated the penny since 2013, and adopted rounding policy to simplify transactions.
Businesses and consumers that rely heavily on cash could be affected by the elimination of the penny.
Rounding rules can cause subtle changes in price for customers and retailers.
Nickel’s inefficient cost may lead to further discussion on whether five-cent coins should also be the next ones cut.
The US will need to adopt a uniform approach to rounding to maintain price stability in all industries if both coins are removed from circulation.
What do you think of this post? Trump’s push to stop production could be altered as new information emerges
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