The penny, a symbol of U.S. political gridlock

The U.S. government spends 2.4 cents to produce and distribute each U.S. penny worth only 1 cent. Last year it produced 4.9 billion pennies at a cost of 118 million taxpayer dollars. But the penny is almost without value. You can’t buy anything with a penny. Merchants hate them, and most Americans don’t want to carry them. It’s literally not worth picking them up from the ground. You would have to pick one up every five seconds to earn the federal minimum wage. Most pennies held by citizens lie uselessly in drawers, bowls and bottles.

So why doesn’t the U.S. stop making them and save the taxpayers a few million dollars every year? We’re not exactly flush with tax dollar surpluses these days. Canada has just announced it will stop making pennies. Other countries that have eliminated their lowest denomination coins recently include Australia, New Zealand, Hong Kong, Singapore, Sweden, Norway, Denmark, Malaysia, Brazil, and India. In the name of efficiency, at U.S. military bases overseas the Army and Air Force Exchange Service has eliminated pennies by rounding to the nearest five cents.

The experience of all those countries has been that the elimination of low denomination useless coins has had no impact on inflation, and has saved tax dollars.

But lobbyists hired by the companies supplying zinc to the U.S. Mint have succeeded in creating an astroturf (as opposed to grassroots) campaign to retain the penny despite the cost. See their propaganda at Americans for Common Cents. They successfully scare Congress into believing that Americans will vote against anyone supporting elimination of the penny to save money.

So production of useless pennies continues to be an expense paid for by U.S. taxpayers, and is a symbol of the political gridlock in Washington which makes even the simplest and most logical reforms impossible.