President Donald Trump’s surprise order on Sunday to halt the minting of billions of pennies each year was intended as a cost-cutting measure. However, experts argue the move may not yield the expected savings and could even lead to unexpected costs.
The penny, a staple of US currency since 1793, has long been a financial burden on the government. Each one-cent coin costs more than three cents to produce, leading to a net loss of around $85 million annually, according to the US Mint’s 2024 report. This inefficiency made it an early target for the Elon Musk-led Department of Government Efficiency (DOGE).
A symbolic but costly change
While the move is being framed as a prudent financial decision, critics suggest the savings may be illusory. Mark Weller, executive director of advocacy group Americans for Common Cents and a lobbyist for Artazn, the Tennessee-based company that supplies penny blanks, argues that eliminating the coin will not lead to real savings.
“You’re not saving money by doing this,” Weller said, explaining that consumers will instead use more nickels, which cost nearly 14 cents each to mint. This shift could negate any financial benefit of retiring the penny.
The idea of scrapping the penny is not new. It has been floated since at least 1989 and has been viewed as more of a novelty policy proposal than a serious cost-cutting strategy. The debate even made its way into pop culture, featuring in a 2001 episode of The West Wing.
Previous legislative efforts to end penny production, including one led by the late Senator John McCain in 2017, failed due to public resistance and congressional inertia. However, the declining use of physical cash, coupled with the increasing cost of producing coins, has made the issue more pressing in recent years.
A logistical nightmare?
One unintended consequence of the policy could be a flood of pennies returning into circulation. The government estimates that more than 200 billion pennies are currently sitting unused in people’s homes, car cupholders, and piggy banks. If Americans attempt to cash in these forgotten coins en masse, it could overwhelm banks and storage facilities, leading to significant logistical headaches.
The transition away from the penny could also have wider economic implications. Some economists warn that it may lead to price rounding, potentially fuelling inflation. Others argue that the costs of updating vending machines, cash registers, and accounting systems could outweigh any immediate savings.
Weller warned that eliminating the penny sends “absolutely the wrong signal” at a time when inflation remains a major concern. “It’s almost like that’s waving the white flag in the face of inflation,” he said.
A coin war on the horizon?
Rather than eliminating the penny, some suggest an alternative cost-saving measure—changing the composition of the nickel. Weller proposes increasing the amount of zinc in nickels, which would reduce production costs. However, such a change could spark intense lobbying battles among industries that rely on metal supplies for coin production.
The penny itself is a copper-plated zinc coin, and altering the composition of other coins could pit different metal producers against one another in a fierce competition for government contracts. Some critics have speculated that the administration might take an even bolder step—eliminating nickels entirely to generate further savings.
Legal and political hurdles
Trump’s directive may also face legal and political challenges. Under the US Constitution, Congress holds the power to regulate the nation’s currency. While the Treasury Secretary has some discretion over coin production, major changes to the monetary system typically require congressional approval.
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There is precedent for such decisions, however. In 2011, the Treasury halted mass production of dollar coins due to lack of demand. Historically, the US has also phased out several coins, including 2-cent, 3-cent, and 20-cent pieces in the 19th century.
The extent of congressional opposition to Trump’s penny directive remains unclear. The policy could impact jobs in Tennessee, North Carolina, Denver, and Philadelphia—locations where pennies are manufactured and processed. Lawmakers from these states may push back against the move to protect local industries.
Senator Joni Ernst of Iowa, co-chair of the newly formed Senate DOGE Caucus (named after the Musk-led efficiency initiative), had previously supported legislation aimed at altering the metallic composition of coins to cut costs. However, she has not advocated for eliminating coins outright.
With political, economic, and logistical challenges ahead, Trump’s penny plan may prove to be more complicated than it first appears. While the administration claims it will save money, opponents warn that the move could lead to unintended consequences that make the penny’s demise more costly than anticipated.
