For decades, the U.S. has had a problem with pennies. Currently, it costs more than 3 cents to mint a single penny. As a result, the U.S. is losing millions of dollars every year producing these coins.
Moreover, few people use pennies after receiving them as change, creating a constant need for more pennies. The lack of pennies in circulation causes the U.S. to mint more pennies that probably won’t be used. Instead of continuing with this perpetual production of pennies, the U.S. should abolish the coin.
It is generally thought that to stop minting pennies, Congress would have to pass a law getting rid of them. But Congress is often busy with more important matters. Fortunately, U.S. law may provide a way to end penny production without Congressional action.
According to Title 31 of the U.S. Code, Section 5111, “The Secretary of the Treasury shall mint and issue coins … in amounts the Secretary decides are necessary to meet the needs of the United States.” This means that if the Secretary of the Treasury were to decide that pennies were no longer necessary to meet the needs of the United States, they may have the power to abolish the penny.
Even if the U.S. manages to get rid of the penny, one problem still remains. As of right now, pennies are necessary in cash transactions that can’t be settled with larger coins. To address this issue, we should follow Canada’s example.
Years ago, Canada faced a similar problem with pennies. They cost too much to produce and had little purpose. So, they abolished the penny and implemented a rounding system for cash payments.
Payments that aren’t cash are still rounded to the exact cent, but cash transactions are rounded to the nearest nickel. For example, a person would pay $4.35 in cash for a product that costs $4.33, and something that costs $4.42 would be $4.40 in cash.
While some may find this system unfair, as it could increase the amount they have to pay by a few cents when they use cash, economist Robert Whales found that, using this rounding system, prices are just as likely to round up as they are to round down. So although people who use cash regularly will have to pay a couple cents more for some things, they will see the price they have to pay decrease just about as often.
It is ridiculous that we waste millions of dollars every year making coins that the majority of people won’t use. Pennies have been an issue for decades. We have to stop procrastinating and make a decision that will benefit the country.
