A Penny for Your Thoughts
Should we keep or get rid of the penny?
In 2012, it cost the United States Mint 2.41 cents to make one penny. When the Federal Reserve Banks order them, they pay the face value of the penny to the Mint. That results in a loss to the taxpayer of 1.41 cents for every penny made. Six billion pennies were made in 2012. You do the math. That’s an $84,600,000 loss.
Eliminating the penny would save the taxpayers $84.6 million a year. With record federal deficits pushing our national debt to new heights, you would think that getting rid of the penny is a no-brainer.
But the weak economic recovery makes getting rid of the penny harder. Charitable giving is down and a lot of pennies end up going to charities, which would hurt them if the penny were gone. A lot of families are living on the edge, and can use every penny. And eliminating the penny would require rounding to the nearest 5 cents, which has a mild inflationary effect the first year.
Besides, there are only two ways to eliminate the penny. It’s not a decision for the United States Mint. The Constitution gives Congress the authority, so they would have to pass a law to end the cent. Or people stop using the penny, causing banks not to replenish their penny inventories resulting in the Mint not having to make them.
It looks like the penny will be with us for a while.
Tags: Economics, United States Mint
Categorised in: Blog