Trump Pinches Penny Production. Dimes and Quarters Offer a Solution.
Budget hawks applaud the decision, but experts warn that costly nickels could undermine potential savings. Dimes and quarters offer a more efficient path forward.
President Donald Trump has ordered the Treasury to halt penny production, citing significant losses. In 2024, pennies cost 3.69 cents to produce, resulting in an $85.3 million loss, according to U.S. Mint reports. The decision has been praised by budget hawks but raised concerns among economists and consumer groups. (NYT)
Eliminating pennies may increase reliance on nickels, which are even more costly to produce at 13.78 cents per coin, leading to a loss of about $17.7 million in 2024. This number would increase if more nickles were needed. Economists warn that unless the production of nickels is also addressed, halting penny production could worsen financial inefficiencies.
Critics, including Americans for Common Cents, argue that removing pennies could also force retailers to round prices, potentially creating consumer backlash. However, proponents maintain that digitized payments are already reducing the need for physical coins. A Treasury spokesperson confirmed that the halt is temporary. The United States Mint derives its authority from the United States Congress, and therefore Congressional approval is needed.
What about dimes and quarters?
On the other hand, both dimes and quarters geberate positive returns per coin produced. In 2023, the U.S. Mint reported that producing each dime cost approximately 5.3 cents, resulting in a seigniorage (profit) of 4.7 cents per coin. Similarly, each quarter cost about 11.63 cents to produce, yielding a seigniorage of 13.37 cents per coin. This efficiency makes dimes and quarters more sustainable options for currency production. (Coin News)
The Big Picture
Given the federal budget deficit of approximately $1.8 trillion in fiscal year 2024, the combined loss from penny and nickel production constitutes about 0.0057% of the deficit. While eliminating the production of these coins would result in some savings, the impact on the overall federal deficit would be minimal. Still, the cost savings could be worth it, especially if the dime and quarter are prioritized.