With no intent to score any political points (and please refrain from that in any comment)...
Trump’s statement: "I have instructed my Secretary of the US Treasury to stop producing new pennies" does not in itself mean the end of the penny. He does seem to have the authority to stop new pennies being ordered, but complete discontinuation would seem to require an Act of Congress. Sure, he has control of Congress, but that doesn’t necessarily mean he will always get his own way.
Halting production of something that has a higher material cost than its ‘worth’ would seem to be a no-brainer, but it’s not quite as simple as that. The US Mint reported in 2024 that the unit cost for the one-cent coin is more than 3.69 cents and that “There are no alternative metal compositions that reduce the manufacturing unit cost of the penny below its face value.” The bulk of that cost is indeed raw materials, but also includes things like secure transport distribution and, crucially, manufacturing overheads. The overheads don’t simply disappear if one-cent production stops. They get re-allocated across everything else the Mint produces, although that could be offset in part by a reduction in employee numbers (principally at the Denver branch, which produces the majority of pennies).
Although Musk said that producing 4.5 billion pennies in Fiscal Year 2023 cost taxpayers more than $179 million, that’s not really true. The US Mint is part of the Department of the Treasury and sells currency to the Federal Reserve at face value. Since the 1996 creation of the Public Enterprise Fund, the Mint has been self-funded, covering its operating expenses and capital investments from the sale of circulating coinage to the Federal Reserve Banks and sale of numismatic items to the general public collector community. Revenues in excess of the amounts required by the PEF (known as “seigniorage”) are transferred to the United States Treasury General Fund and mostly used to help pay off the national debt.
Consequently, the US taxpayer is not directly impacted by the high cost of producing pennies (and nickels, costing 13.78 cents each). It just reduces the amount of excess revenue (generated from other coinage items) that can be transferred to Federal Reserve. So, any impact needs to be seen in terms of the overall financial ‘pot’.
Putting aside any possible inflationary effects arising from the disappearance of the penny (although most countries that have eliminated low-denomination coins say that the effects have been minimal), the overall ‘pot’ cannot be ignored, including the effects on employment numbers.
Jarden Zinc Products of Greeneville, Tennessee is the sole provider of zinc planchets (penny blanks) to the Mint, as well as being the only primary zinc producer in the United States. They have 204 employees and, apart from some niche products, the blanks are their primary revenue stream.
It’s also a mystery to me why the US has persisted with one-dollar bills when replacement with a more durable one-dollar coin could potentially save a much larger amount of money (at least $500 million per year) than any decision on pennies could.
