The True Cost of Abolishing the Penny

President Trump recently announced his intention to stop producing new pennies, calling them wasteful. But is the plan to discontinue the penny really about economics? Or is actually about dismantling another thread in our cultural fabric? As with so many other DOGE priorities, the focus seems to be on the lowest-budget items with the highest capacity to further push us off balance as a community.

The Economic Argument of Abolishing the Penny

On this one, Trump isn’t wrong: producing pennies likely does contribute to a subtle inflationary mechanism. Each penny costs approximately 3.7 cents to manufacture, meaning the government loses money with every coin minted. The production costs, primarily driven by metal prices, create an economic paradox: we're spending more to create less value. According to the U.S. Mint, this negative return resulted in an $85.3 million loss on the nearly 3.2 billion pennies produced in fiscal year 2024.

This penny-production paradox might offset the minor inflation potentially caused by getting rid of the penny. As WSJ reported, Oyin Adedoyin, explains:

Other countries have done away with [the penny] for years now, and it hasn't had major inflationary effects on their economies. We would likely revert to the nickel. That would become the new low denomination currency, and cash transactions would be rounded then to the nearest 5 cents. So for example, something costing $19.82 would now become $19.80 cents, while maybe $19.83 would become $19.85 cents. As far as when you're shopping online or using credit cards or checks, nothing would change for you.

But the penny isn’t the only costly coin. Since 2006, both pennies and nickels have been more expensive to make than their face value. So getting rid of the penny, and moving to another coin that costs too much to produce—the nickel—might not actually have much of any impact on the mint’s expenses. In fact, it might actually increase minting costs.

From American for Common Cents, a pro-penny group funded primarily by Artazn, the company that has the contract to provide the blanks used to make pennies:

Without the penny, the volume of nickels in circulation would have to rise to fill the gap in small-value transactions. Far from saving money, eliminating the penny shifts and amplifies the financial burden. Even if the Mint has to make only 850,000 additional nickels in 2025 to meet demand from retailers, that would wipe out the savings of eliminating the penny. If it goes back up to making 1.4 million nickels a year, that would cost $78 million more than the cost of pennies it is no longer making.

Trump isn’t the first person or president to give some cost-cutting thought to the penny: Back in 2013, President Obama considered the value of dropping the penny:

"This is not going to be a huge savings for government…But anytime we're spending more money on something that people don't actually use, that's an example of something we should probably change."

And lots of other countries have already dropped their pennies. Canada, New Zealand, Sweden eliminated their pennies in 2012, 1990, and 1972, respectively.

From an economics perspective, the death of the penny is one thing you probably don’t have to worry about.

But, it still hurts to say goodbye. And here’s why:

Pennies: More Than Just Currency

The penny's potential elimination represents more than a budget line item. It's another subtle destabilization, another nudge pushing us off our comfortable cultural balance.

Perhaps it's no coincidence that the coin bearing Abraham Lincoln's likeness finds itself on the chopping block. The irony couldn't be more pointed: Donald Trump proposing to remove the portrait of "Honest Abe" from everyday currency. It's a symbolic gesture that resonates far beyond monetary policy—a potential erasure of a presidential icon known for integrity.

The Real Impact: Minimal, Yet Massive

Practically speaking, abolishing the penny would have minimal economic consequences. The U.S. budget won't dramatically shift and it shouldn’t cause any noticeable inflation. But symbolically? We're chipping away at something fundamental.

The penny might be small, but its potential disappearance speaks volumes about our changing landscape—where emblems of our once-shared cultural values of honesty, equality and progress are relegated to history display cases.

I leave you today with a poem by my 10 year old daughter, reminding you to never pity a perfect pretty penny…Enjoy!

A PRETTY PERFECT PENNY

by Sydney (age 10)

Pennies are perfect in plenty of ways.

There are old pennies,

new pennies,

brown pennies,

pennies green with mold.

They are made of copper, which is parted and pressed.

to make a perfect a pretty penny,

which I like best.

You can do many things with perfect pretty pennies.

You can

play with them,

You can

pay with them.

You can

pick them up

as you pass by.

Even though one perfect pretty penny

is

not

enough

to purchase a pineapple

or a peach.

Even though one perfect pretty penny

can

not

play piano

or eat pizza with pepperoni.

If you pool your pennies,

you

may

have

enough

perfect pretty pennies

to buy

pizza for a party.

In that case you will have plenty of pennies.

Enough to purchase

a pineapple

or a peach.

You may even have enough

to travel to paradise

and sit on the beach.

So please do not pity perfect pretty pennies.

If you want, I suppose,

you could talk to a penny.

But no matter how much you plead,

it may not reply.

So PLEASE just stick

to

paying

or

playing

or

picking them up as you pass by.

And whatever you do,

please

do

not

ever

pity

a pretty perfect penny.

Ms. Money is written by Marisa Rothstein, JD, CFP(t), AEP, and Lead Financial Advisor at Siena Private Wealth, A Member of Advisory Services Network, LLC.

Nothing contained in this article should be construed as investment, legal or tax advice. Consult your tax or legal advisor regarding your situation. To learn more about Siena Private Wealth, visit: www.sienaprivate.com. All information contained herein is derived from sources deemed to be reliable but cannot be guaranteed. All views/opinions expressed in this newsletter are solely those of the author and do not reflect the views/opinions held by Advisory Services Network, LLC.